*note: book name bank management

Question No. 4: Clinton National Bank holds assets and liabilities whose average durations and dollar amounts are shown in this table:

Asset and Liability Items	Average Duration (years)	Dollar Amount (Millions)
Investment grade bonds	18	600
Deposits	1.4	3,200
Consumer loans	6	1,200
Commercial loans	3.5	4,000
Non deposit borrowings	6	200

1. What is the weighted-average duration of Clinton banks assets portfolio and liability portfolio? What is its leverage-adjusted duration gap?

1. DA

2. DL

3. The gap:

2. Blue Moon National Bank holds $10 Million in government bonds having a duration of 12 years. If interest rates suddenly fall from 7 percent to 5.5 percent, what percentage change should occur in the bonds market price?

1. p =