County Bank has the following market value balance sheet (in millions, all interest at annual rates). All securities are selling at par equal to book value.

ASSETS

-Cash: $20

-15 yr commercial loan at 10% interest, balloon payment: $160

-30 yr mortgage at 8% interest, balloon payment: $300

TOTAL: $480

LIABILITIES

-Demand Deposits: $100

-5 yr CD's at 6% interest, balloon payment: $210

-20 yr debentures at 7% interest, balloon payment: $120

-Equity: $50

TOTAL: $480

a) What is the maturity gap for County Bank?

b) What will be the maturity gap if the interest rates on all assets and liabilities increase 1 percent?

c) What will happen to the market value of the equity?

And is there a BA II Plus way to solve?

a) What is the maturity gap for County Bank?

b) What will be the maturity gap if the interest rates on all assets and liabilities increase 1 percent?

c) What will happen to the market value of the equity?

And is there a BA II Plus way to solve?