Need help answer the following questions:

1. Consider the following balance sheet (in millions of $) for a bank:

ASSETS	NOMINAL VALUE	LIABILITIES	NOMINAL VALUE
CORPORATE LOANS DUE IN 7.5 YEARS	$790	CERTIFICATES OF DEPOSIT DUE IN 1.5 YEARS	$650
		EQUITY	$140

What is the bank's duration gap (in years)?

Answer:

2. Consider a bank with the following balance sheet:

ASSETS	VALUE	DURATION	LIABILITIES	VALUE	DURATION
Cash	$10,000	0	4-yr Bond @ LIBOR	$3,000	1
5-yr Loan @ 5%	5,000	3	3-yr Bond @ 5%	5,000	2
4-yr Loan @ 6%	5,000	2	6-yr Bond @ 6%	2,000	5

What is the bank's duration gap (in years)?

Answer: