only question 4 5 and 6 in the file

4)a) Suppose interest rates in the economy rise from 1% to 6%, what will happen to Typical Bank’sprofit? Show a calculation.b) Calculate the average duration of assets and liabilities for Typical Bank.c) Suppose interest rates rise in the economy from 1% to 6%, what will happen to Typical Bank’scapital relative to assets? Show a calculation.d) Using the original balance sheet information, what is the leverage ratio for Typical Bank? Brieflyexplain whether they comply with regulations for the leverage ratio or not.e) Using the original balance sheet information, if Typical Bank had an ROA of 2%, what is thebanks’s ROE?

5) For each statement, state whether you believe the statement is true or false. Provide a briefexplanation of your reasoning.a) Depositors face an adverse selection problem when choosing where to bank.c) The principal-agent problem means shareholders face an adverse selection problem in the stockmarketd) Financial Services Modernization Act allowed a bank to sell insurance if it wanted to do so.

6)For each of the following you only need to provide a one or two-word response (chooseone of the underlined phrases for each statement).a) Because certificates of deposit are less liquid than checking deposits, certificates of deposit arepaid more or less interest?b) Higher bank capital decreases the likelihood of bankruptcy and higher bank capital increases ordecreases the return on equity for a given return on assets?c) When financial system regulators conduct an examination of bank operations, this is an exampleof microprudential or macroprudential regulation?d) When we talk about a bank needing to improve its liquidity management, we usually mean thebank the needs to focus on its excess or required reserves level?