The news clip deals with the question of a. for whom goods are produced: publishers of e-books and producers of e-book readers b. how goods are produced: by apple and amazon c. what and how goods are produced: an app for the ipad made by amazon d. what is produced: e-books and e-book readers. for amazon, arrival of the ipad opens door to more e-book sales electronic books are expected to be a major selling point for apple's ipad. amazon, apple's main competitor, produces the kindle and e-books to be read on the kindle. but amazon says that it will produce an ipad app that will enable ipad users to read kindle e-books. amazon has tussled with publishers over e-book prices, but book publishers will adopt a new pricing model that might improve amazon's profit margin on e-books. the new e-book prices will assign 30% of revenue to e-book retailers such as amazon and apple.

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.