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The First National Bank of Goatsville finds that its asset and liability portfolio contain the following distribution of maturities and repricing opportunities: Interest-sensitive assets Loans

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The First National Bank of Goatsville finds that its asset and liability portfolio contain the following distribution of maturities and repricing opportunities: Interest-sensitive assets Loans Securities Coming Week Next 30 Days Next 31-90 Days $ 120.00 $ 170.00 $ 245.00 $ 10.50 $ 13.00 $ 20.00 More Than 90 Days $ 265.00 $ 35.00 Interest-sensitive liabilities Coming Week Next 30 Days Next 31-90 Days More Than 90 Days Transaction deposits 180.00 $ . $ Time accts. 80.00 $ 175.00 $ 128.00 $ 150.00 Money market borrowings 128.00 $ 80.00 $ 60.00 43.00 1. Calculate the GAP and cumulative GAP. (1 marks) Hint: use the following table to structure your calculations. $ Coming Week Next 30 Days Next 31-90 Days More Than 90 Days GAP Cumulative GAP 2. For each of the 4 time periods given, discuss whether First National Bank of Goatsville would benefit from falling or rising interest rates. (3 marks) 3. Discuss 2 advantages and 2 disadvantages of the GAP method. (2 marks)

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