Blue Sunday Bank has a portfolio of loans and securities, as well as deposits and money market borrowings, which are expected to produce the following cash inflows and outflows for the bank in the coming five years. Cash inflows are denoted with a +; cash outflows are denoted with a -.

Expected Cash Flow (in millions) Timing of Cash Flow + 1.9 million 1 year from today - 1.4 million 1 year from today + 750,000 2 years from today - 830,000 2 years from today + 350,000 3 years from today - 400,000 3 years from today + 65,000 4 years from today - 45,000 4 years from today + 10,000 5 years from today - 40,000 5 years from today

Complete the following, and label your work carefully so that it is clear for your instructor:

Assume the current discount rate that applies to these cash flows is 4.5%. In a spreadsheet, compute the duration of the total cash inflows and the duration of the total cash outflows; then compute the duration gap of this bank.

In your own words, explain the danger of the banks position. You may enter this answer in a cell within your spreadsheet.