The following information is obtained from REC Bank: Asset Liability and Equity Amount Duration Amount Duration (RM’ 000) 1,500 2,500 |(RM’ 000) 3,000 2,500 2 years 4 years Cash Deposit Non-deposit...

Based on the information above,
(a) Do you agree that REC Bank’s net worth will increase when interest rate rises? Justify your answer with an appropriate analysis.
(b) Evaluate the impact of reducing interest rate from 10 percent to 8 percent on the net worth of REC Bank.

Extracted text: The following information is obtained from REC Bank: Asset Liability and Equity Amount Duration Amount Duration (RM’ 000) 1,500 2,500 |(RM’ 000) 3,000 2,500 2 years 4 years Cash Deposit Non-deposit borrowings Equity Treasury 6 months bills Loans and 8,000 3 years 6,500 advances Total 12,000 Total 12,000