Suppose a bank faces a gap of 20 between its interest-sensitive assets and its interest-sensitive liabilities. What would happen to bank profits if interest rates were to fall by 1 percentage point? You should report your answer in terms of the change in profit per $100 in assets.

A gap of 20 means that the bank has more interest-sensitive (assets OR liabilities) than (assets OR liabilities). When interest rates fall, therefore, bank profits will (fall OR rise) because the bank (loses OR gains) more by paying less on its (assets OR liabilities) than it (loses OR gains) from receiving less on its (assets OR liabilities). The gap of 20 implies that profits will rise by ($.20 OR $2 OR $20) per $100 of assets.