HRB Bank has the following balance sheet (in millions):

Assets $150 Liabilities $135

Equity $15

Total $150 Total $150

The duration of the assets is six years and the duration of the liabilities is four years. The bank is expecting interest rates to fall from 10 per cent to 9 per cent over the next year.

(a) What is the leverage-adjusted duration gap for HRB Bank?(4 marks)

(b) What is the expected change in net worth (in $m) for HRB Bank if the interest rate forecast is

accurate?