Q: Is the statement TRUE or FALSE "A 3% increase in interest would gain the bank $4 million according to both gap and duration analysis.". Explain your work.

Consider the following bank balance sheet:

Assets (2 years duration on average)	Liabilities (3 years duration on average)
$20 million in rate sensitive assets	$40 million in rate sensitive liabilities
$90 million in fixed rate assets	$50 million in fixed rate liabilities
	$20 million capital equity