1. Consider the following balance sheet for XYZ Community Bank: (10 pts)

Assets	$ million	Duration	Risk Weight	Liabilities	$ million	Duration
Reserve	4	0	0	Deposits	40	0
T-Bonds	10	5	0	Money mkt	20	0.2
Agency	6	3	0.2	CD	18	0.8
Mortgage	10	4	0.5	Borrowings	15	2.5
Commercial	30	2	1	Loan Loss Reserve	2	0
Consumer	40	2.5	1	Capital	5	0
TA	100			TL	100

1. Interest rate was 6%. However, the rate has just increased by 1%. What would happen to net worth (capital)?

2. Required reserve for deposits is 10%. The bank experiences a deposit withdrawal for $1 million. Calculate the current reserve and required reserve after the withdrawal. Does the bank have enough reserve to meet the required reserve?

3. Calculate the risk-weighted assets and risk-weighted capital ratio.