Which is more useful to the financial manager? (select the best answer below.) a. the cash flow statement because it recognizes amounts that will not be collected and, as a result, will not contribute to the wealth of the owners. b. the income statement because it recognizes amounts that will not be collected and, as a result, will not contribute to the wealth of the owners. c. the cash flow statement because it recognizes revenues at the time of sale (whether payment has been received or not) and recognizes expenses when they are incurred. d. the income statement because it recognizes revenues at the time of sale (whether payment has been received or not) and recognizes expenses when they are incurred.

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.