1. Consider a bank with the following balance sheet items: 1./ rate-sensitive assets including variable-rate and short-term loans worth $15 million and short-term securities worth $30 million; 2./ rate-sensitive liabilities including variable-rate CDs worth $40 million and money market deposit accounts worth $40 million; 3./ fixed-rate liabilities worth $20 million; 4./ fixed-rate assets worth $75 million; and 5./ equity capital worth $20 million.
   1. Set up a balance sheet for this bank.
   2. Explain the concept of interest rate risk.
   3. Explain the two types of analysis to measure the interest rate risk.
   4. Use these analysis techniques to asses a 5 percentage point increase in the interest rate.