(b) Consider the following balance sheet of Fairview Bank: Duration 8.3 Duration 1.1 3700 7.1 4200 3.2 Assets Variable-rate 1900 mortgages Fixed-rate 1500 mortgages Commercial 6500 loans Physical capital 2900 Liabilities Money market deposits Savings deposits Variable-rate CDs Equity 5.0 2200 1.5 2700 Total 12800 Total 12800 What will be the change in net interest income at the year-end if interest rates decrease by 0.5 per cent, from 4 to 3.5 per cent? Explain using basic gap analysis. (Use the following assumptions for runoff cash flows: fixed-rate mortgages repaid during the year: 15 per cent proportion of savings deposits and variable-rate CDs that are rate-sensitive: 15 per cent). (7 marks) (b) Consider the following balance sheet of Fairview Bank: Duration 8.3 Duration 1.1 3700 7.1 4200 3.2 Assets Variable-rate 1900 mortgages Fixed-rate 1500 mortgages Commercial 6500 loans Physical capital 2900 Liabilities Money market deposits Savings deposits Variable-rate CDs Equity 5.0 2200 1.5 2700 Total 12800 Total 12800 What will be the change in net interest income at the year-end if interest rates decrease by 0.5 per cent, from 4 to 3.5 per cent? Explain using basic gap analysis. (Use the following assumptions for runoff cash flows: fixed-rate mortgages repaid during the year: 15 per cent proportion of savings deposits and variable-rate CDs that are rate-sensitive: 15 per cent). (7 marks)