Bank of Melton's current repricing gap is illustrated in the following diagram: (i) Is Bank of Melton asset-sensitive or liability-sensitive? When is the bank exposed to losses of net interest

Bank of Melton's current repricing gap is illustrated in the following diagram:

(i) Is Bank of Melton asset-sensitive or liability-sensitive? When is the bank exposed to losses of net interest income? (4 marks)

(ii) The bank managers anticipate interest rates will fall. If they adopt an active gap management approach, what specific adjustments should they make to the banks current asset-liability portfolio? (4 marks)