Consider the four banks balance sheet in Appendix A and associated average interest rates. The period for rate sensitivity is one year.For each four banks in Appendix A, calculate their GAP, expected NII, and NIM if interest rates and portfolio composition remain constant during the year. Explain how each bank is positioned to profit if interest rates move in which direction.PART 2Calculate the change in expected NII and NIM if interest rates shift 2 percent higher during the year. Is this outcome consistent with each bank’s static GAP?PART 3Suppose that, instead of the parallel shift in interest rates in PART 2, interest rates increase unevenly. Specifically, suppose that asset yields rise by 0.50 percent while liability rates rise by 0.75percent. Calculate the change in NII and NIM. Is this uneven shift in rates more of less likely than a parallel shift?PART 4Suppose each bank converts £150 of RSLs to fixed-rate liabilities during the year and interest rates remain constant. What wold the bank’s NII equal compared with the amount initially expected? Explain why there is a difference.PART 5Discuss the strength and weaknesses of static GAP analysis.
USA 
India