Question 3. Consider the following bank balance sheet and associated average interest rates. The time frame for rate sensitivity is one year. Figures are in thousands. Assets Amount $ Rate Liabilities & Equity Amount $ Rate Rate sensitive 103,300 3.30% Rate sensitive 91,600 0.80% Fixed rate 161,400 4.50% Fixed rate 181,850 2.10% Nonearning 27,500 Nonpaying liabilities & Equity 18,750 Total 292,200 292,200 Required a. Calculate the banks GAP, expected NII, and NIM if interest rates and portfolio composition remain constant during the year. This bank is positioned to profit if interest rates move in which direction? b. Calculate the change in expected NII and NIM if the entire yield curve shifts 2 percent higher during the year. Is this outcome consistent with the banks static GAP? c. Suppose that, instead of the parallel shift in the yield curve in Part b, interest rates increase unevenly. Specifically, suppose that asset yields rise by 0.50 percent while liability rates rise by 0.75 percent. Calculate the change in NII and NIM. Is this uneven shift in rates more or less likely than a parallel shift? d. Suppose the bank converts $20,000 of RSLs to fixed-rate liabilities during the year and interest rates remain constant. What would the banks NII equal compared with the amount initially expected? Explain why there is a difference.