What are the major sources of interest rate risk and analyse GAP as one of the main tools of measuring and managing interest rate risk.

Calculate the Net Interest Income, Net Interest Margin, and GAP based on the latest balance sheet data of ABC Bank and then comment on the profitability of the Bank if interest rates rise/fall.( The assumed time frame is 6 months )

	Assets ($ millions)	Yield rates	Liabilities ($ millions)	Interest costs
Fixed-rate	400	2%	200	3%
Rate-sensitive	800	5%	1,100	4%
Non-earning/ Non-paying	300		200
TOTAL	1,500		1,500