You are given the following information on a bank:

Total Assets = two-hundred and fifty million dollars

Duration of Total Assets = 3 years

Liabilities = two-hundred and five million dollars

Duration of liabilities = 4 years

this bank is subject to Basel III requirements and needs to have a capital to asset ratio of at least 8% percent.

Question 1

Compute the capital/asset ratio.

Question 2

If interest rates increase from six percent to seven percent, does the bank comply with the 8% percent Basel III requirement? Compute the new capital/asset ratio following the increase in interest rates.