Total Branch loans | Value $45.b | Lending Rate 7.0 percent per annum

Total Deposits from Deposit Branches | Value $45b | Deposit Rate3.5 percent per annum

(a)Using the data provided above, calculate the net revenue and loss of the loan and deposit branches without the intervention of the Treasury Department?

(b)Construct a charge/reward mechanism based on the data provided above, if Treasury Department of this Bank decides to buy all deposits at 4.5 percent per annum and sells funds to branches for loan activities at 5.5 percent per annum.

(c)Explain how the mechanism implemented by the Treasury Department would assist in meeting the direction given by ALCO?