1. Below is an excerpt from the current rate sensitivity report for Bank A ($ million). Maturity Bucket Overnight

1-30 days 31-91 days 92-181 days Assets Federal Funds 20 Loans 0 10 15 75 Liabilities Federal Funds 50 Certificates of Deposit 5 25 40 5 Required: (a) Calculate the repricing (funding) gap for the bank using a 91-day maturity period. (b) How will a decrease of 25 basis points in all interest rates affect the banks' net interest income over a planning period of 91 days? (c) What does the bank's 91-day gap positions reveal about the bank management's interest rate forecasts and the bank's interest rate risk exposure? (d) Briefly outline merits and demerits of the repricing (funding) gap model.