please answer question 18. The answer to question 17 is 2% p.a. Since question 18 has no calculations, please provide a brief explanation on which is the correct answer. Thank you very much.

($ million Liabilities: 1 year Certificates of Deposit $ 825m 5 year Bonds 70m Bank of Baruch Assets: 91 day US Treasury bills $ 150m 2 year commercial loans $ 75m Fixed rate, 9% p.a. annually 10 year corporate loans-floating rate: LIBOR+50bp, semiannual roll date $ 505m 10 year floating rate mortgages quarterly roll dates $ 600m Overnight Fed Funds 91-day Commercial Paper Equity 100m 270m 65m Notes: Commercial paper is a pure discount instrument. The 5 year bonds pay 8.5% p.a. semiannually with a yield of 7.5% p.a. and have a duration of 4.2 years. The 1 year Certificates of Deposit pay 2.75% p.a. annually. All values are market values. 17. If I year spot rates are 3% p.a. and 2 year spot rates are 2.5% p.a., what is the If 1 year implied forward rate for delivery in one year of one year maturity securities a. 3% p.a. (IFS) (b) 2% p.a. c. 2.5% p.a. (l+.03) d. 1.03 4% - p.a. e. 5% p.a. 1.os - 1 n.12 (1+s, n2 s .OB 52= .025 .(t,025) ) 2.02 18. Using your answer to question number 17, the market's consensus estimate of expected future spot rates is: a. One year spot rates are expected to decrease by 100 basis points. b. Two year spot rates are expected to increase by 100 basis points. c. One year spot rates are expected to decrease by 200 basis points. d. Two year spot rates are expected to increase by 200 basis points. e. One year spot rates are expected to decrease by 250 basis points. 19. What is the expected impact on the bank's equity value if interest rates are expected to fluctuate according to the expectations incorporated into the implied forward rate from question number 17?! a. -$11.58 million b. $14.48 million c. -$5.79 million d. -$17.37 million e. -$2.9 million