Use the balance sheet information (Q1 Data) in the attachment provided.

1. The bank has granted a special loan that has 3 years to maturity and has repayments of $357.875 million at the end of year 1, no payment at the end of year 2 and $357.875 payments at the end of year 3. The loan is trading at par and the yield to maturity is 5 percent per annum. Assuming a flat yield curve and a parallel shift of the entire yield curve of 50-basis points upward, what is the impact on the FI's market value of equity?Provide concise workings.
2. Calculate the convexity for a three-year 5% coupon rate with a face value of $500,000 loan. What is the convexity of the same loan but with amortised payments? Use this information to determine the impact on the market value of the bond loan and the amortised loan if the entire yield curve shifted downward 50-basis points. What is the usefulness of convexity when duration is available as a measure of interest rate risk? What is the practical implication for the three-year loan in this example?
3. Use the balance sheet in the attachment (Q3 Data) provided. Would you recommend this bank rely more on asset liquidity or liability liquidity to meet these additional requirements? Give reasons. Show how you would manage the bank's liquidity position. What other information that the financial institution would possess would improve your decision. Be specific.
4. Use the Information in the attachment (Q4 Data) provided. Using an appropriate method, show which variable has the greatest impact on sustainable growth.