1. You are given the following information regarding the XYZ Bank. All the values are in rupees million.

Assets	Liabilities
Cash and deposits 300 Securities Less than 1-year 1800 1 to 2 years 300 Greater than 2 years 500 Consumer loans Less than 1 year 4200 1 to 2 years 1300 Greater than 2 years 1100 Physical capital 500 Total 10000 Average duration 2.26 Years	Commercial paper 2500 Bank loans Less than 1-year 1800 1 to 2 years 400 Greater than 2 years 1300 Long-term bonds and other long-term debt 3000 Capital 1000 Total 10000 Average duration 5.37 Years

You are required to Calculate:

a) The short run effect of lowering the interest rate in the economy from 25% to 19% on the XYZ Bank.

b) The long run effect of lowering the interest rate in the economy from 25% to 19% on the XYZ Bank's net worth.

c) Proposed suitable strategies to manage the interest rate.