Chrissy spends her income on fishing lures (L) and guitar picks (G). Lures are priced at $2, while a package of guitar picks cost $1. Assume that Chrissy has $30 to spend and her utility function can be represeted as U(L, G) = L^{0.5} G^{0.5} . For this utility function, MUL = 0.5L^{-0.5} G^{0.5} and MUG = 0.5L^{0.5 } G^{-0.5} .

What is the optimal number of lures and guitar picks for Chrissy to purchase?

How much utility does this combination bring her?

Variable rate cd’s = $90 treasury bills = $150 discount loans = $20 treasury notes = $100 fixed rate cds = $160 money market deposit accts. = $140 savings deposits = $90 fed funds borrowing = $40 variable rate mortgage loans $140 demand deposits = $40 primary reserves = $50 fixed rate loans = $210 fed funds lending = $50 equity capital = $120 a. develop a balance sheet from the above data. be sure to divide your balance sheet into rate-sensitive assets and liabilities as we did in class and in the examples. b. perform a standard gap analysis and a duration analysis using the above data if you have a 1.15% decrease in interest rates and an average duration of assets of 5.4 years and an average duration of liabilities of 3.8 years. c. indicate if this bank will remain solvent after the valuation changes. if so, indicate the new level of equity capital after the valuation changes. if not, indicate the amount of the shortage in equity capital.