Using the following information, answer questions. Show your calculations. The following is an FI's balance sheet ($millions). Notes to Balance Sheet: Munis are 2-year 6 percent annual coupon municipal notes selling at par. Loans are floating rates, repriced quarterly. Spot discount yields for 91-day Treasury bills are 3.75 percent CDs are 1-year pure discount certificates of deposit paying 4.75 percent. What is the duration of the municipal notes (the value of x)? A. 1.94 years. B. 2.00 years. C. 1.00 years. D. 1.81 years. E. 0.97 years. What is this bank's interest rate risk exposure, if any? A. The bank is exposed to decreasing interest rates because it has a negative duration gap of -0.21 years. B. The bank is exposed to increasing interest rates because it has a negative duration gap of -0.21 years. C. The bank is exposed to increasing interest rates because it has a positive duration gap of +0.21 years. D. The bank is exposed to decreasing interest rates because it has a positive duration gap of +0.21 years. E. The bank is not exposed to interest rate changes since it is running a matched book. What will be the impact, if any, on the market value of the bank's equity if all interest rates increase by 75 basis points? (i.e., Delta R/(1+R) = 0.0075) A. The market value of equity will decrease by $15, 750. B. The market value of equity will increase by $15, 750. C. The market value of equity will decrease by $426, 825. D. The market value of equity will increase by $426, 825. E. There will be no impact on the market value of equity. Consider a six-year, $1,000 par value, zero-coupon bond yielding 8 percent. What is the change in price caused by convexity in the duration-convexity model for an interest rate increase to 9 percent? Show your calculations A. $0, 882. B. $1, 134. C. $4, 096. D. $0, 810. E. $9, 831