Michael Banks balance sheet is listed below. Corresponding market yields and durations (in years) are in parenthesis, and amounts are in millions.

Assets			Liabilities and Equity
Cash	20		Demand deposits	250
Fed funds (5.05%, 0.02)	150		MMDAs (4.5%, 0.50)	360
T-bills (5.52%, 0.22)	200		(no minimum balance requirement)
C&I loans (5.8%, 6.58)	475		CDs (4.3%, 0.48)	665
Fixed-rate mortgages (7.85%, 18.50)	1,200		Fed funds (5%, 0.02)	920
Variable-rate mortgages,	580		Subordinated debt:	200
repriced @ quarter (6.3%, 0.25)			Fixed-rate (7.52%, 5.56)
Premises and equipment	120		Total liabilities	$2,395
			Equity	350
Total assets	$2,745		Total liabilities and equity	$2,745

a. What is Michael Banks leverage adjusted DGAP? Illustrate your calculation. (10%)

b. Use these duration values to calculate the expected change in the value of the assets and liabilities of Michael Bank for the predicted increase of 1.55% in interest rates. Please illustrate clearly on the change on each items on the asset and liability side.(10%)

c. What is the change in equity value forecasted from the duration values for the predicted increase in interest rates of 1.55%? (Note: Use your findings in part (b).) (5%)