1. Calculate the duration gap for the bank. (5m)
2. Calculate the expected net worth if interest rates were to raise 100 basis points from the current rate of 10%. (4m)
3. What action could the managements take to decrease it interest rate risk? (6m) 250 words

Assets (RM) Reserves 5,000,000 Securities 2 years Residential mortgages Variable rate Fixed rate Commercial loans 2years Buildings, etc. 10,000,000 15,000,000 5,000,000 5,000,000 5,000,000 0.50 0.20 1.20 2.70 0.00 15,000,000 10,000,000 25,000,000 5,000,000 1.60 Money 7.00 market deposits Savings 0.50 accounts 6.00 CDs Variable-rate 2 years 4.00 Interbank 0.00 loans Borrowings 2 years Bank Capital Total 10,000,000 5,000,000 5,000,000 5,000,000 0.30 1.30 3.10 100,000,000 100,000,000 Total Assets (RM) Reserves 5,000,000 Securities 2 years Residential mortgages Variable rate Fixed rate Commercial loans 2years Buildings, etc. 10,000,000 15,000,000 5,000,000 5,000,000 5,000,000 0.50 0.20 1.20 2.70 0.00 15,000,000 10,000,000 25,000,000 5,000,000 1.60 Money 7.00 market deposits Savings 0.50 accounts 6.00 CDs Variable-rate 2 years 4.00 Interbank 0.00 loans Borrowings 2 years Bank Capital Total 10,000,000 5,000,000 5,000,000 5,000,000 0.30 1.30 3.10 100,000,000 100,000,000 Total