The following is the City Bank $T$ account.

a$.$ Using Gap analysis, calculate the change of income if interest rates changed from $10\%$ to

$15\%$

b$.$ Using Gap analysis calculate the change in the market value of the net worth as a

percentage of total assets if interest rates increased from $10\%$ to $15\%.$ Assume an

average duration of $4$ years for the rate$-$sensitive assets, and an average duration of $6$

years for the rate$-$sensitive liabilities.

c$.$ Referring to $"$b$"$ above, what is the market value of the net worth as a percentage of total

assets if interest rates decreased from $15\%$ to $13\%?$

d$.$ What strategies should the Bank Manager follow to alleviate the risk of interest rates

increase?