The book value of Dragon Slayer's bank balance sheet is listed below. The current market yield for the securities is in parentheses. The amounts are in millions.

Book value of Dragon Slayer's bank balance sheet

Asset		Equity
Cash	55	Demand deposits	300
6-month T-bills (4.25%)	50	Savings accounts (2.0%)	205
2-year personal fixed rate loan at 6.50%	100	3-month CD (2.50%)	150
3-year T bills (4.85%)	100	9-months CDs (3.85%)	150
3-year 5.5% semi-annual coupon T-notes (5.25%)	90	1-year term deposit (4.0%)	520
5-year 6.2% semi-annual coupon T-notes (5.75%)	100	2-year term deposits (4.30%)	200
5-year personal loan (11.5%, repriced yearly)	350	5-year bonds at 6.75% semiannual interest, balloon payment	250
5-year bond 8.0% annual coupon issued by Spanish government with rating credit rating B	150	20-year bonds at 7.5% interest, balloon payment	250
10-year commercial loan (12.25% repriced at 6 months)	730	Subordinate notes: 3-year fixed rate (5.65%)	230
15-year commercial loan at 10% interest (repriced monthly)	220	6-year fixed rate (6.00%)	150
20-year sovereign bonds 12.0% annual-coupon issued by Cambodian government with BB rating	150	Ordinary Equity	20
20-year mortgages at 8.5% interest (LVR 65%, no mortgage insurance), balloon payment	390	Preference shares	20
		Retained Earnings	40
Total assets	2485	Total liability and equity	2485

Make sure you answer the following:

1. What is the cumulative repricing gap if the planning period is:

   (a) 6 months? (2 marks).

   (b) 2 years? (2 marks).

2. What will happen to the net interest income of the bank, if interest on the banks rate sensitive assets is forecasted to decrease by 60 basis points, and rate-sensitive liabilities to increase 25 basis points in 6 months time? (4 marks)
3. Due to the uncertainty in the economy, and based on the estimate given by the bank, there is a potential of decrease in the demand deposits. What are some of the impacts this may have on the banks overall asset-liability? (4 marks)
4. Does the bank have sufficient liquid capital to cushion any unexpected losses as per the Basel III requirement? (Ignore cyclical buffer requirement). (8 marks)