*note :book name bank management

Question No. 3: Consider the following bank balance sheet and associated average interest rates. The time frame for rate sensitivity is one year.

Assets	Amount	Rate	Liabilities & equity	Amount	Rate
Rate sensitive	$$7,600	6%	Rate sensitive	$7,200	4%
Fixed-rate	8,000	9%	Fixed-rate	7,600	7%
Nonearning	1,600		Nonpaying liabilities	2,400
Total	$17,200		Total	$17,200

1. Calculate the Banks GAP, expected Net Interest Income, and Net Interest Margin if interest rates and portfolio composition remain constant during the year. This bank is positioned to profit if interest rates move in which direction?

1. Banks GAP:

2. Net Interest Income:

3. Net Interest Margin:

2. Calculate the change in expected Net Interest Income and Net Interest Margin if the entire yield curve shifts 2 percent lower during the year.

1. Net Interest Income:

2. Net Interest Margin: