1. A problem on bank's asset-liability management. Consider the following two banks: Bank A and Bank B. Each bank has two assets and two liabilities in their balance sheet. Bank A Assets Maturity Coupon A1 6 years 0% A2 12% Liabilities Maturity Coupon L1 0% L2 14% 10 years FV $200,000,000 $300,000,000 FV $200,000,000 $300,000,000 YTM 10% 10% YTM 8% 8% 14 years 28 years Bank B Maturity Coupon 0% 14% Maturity Coupon 0% 12% Assets A1 A2 Liabilities L1 L2 14 years 28 years FV $300,000,000 $200,000,000 FV $200,000,000 $300,000,000 YTM 10% 10% YTM 8% 8% 6 years 10 years All securities, except the zero-coupon bond, pay interest semi-annually and to evaluate zero- coupon bonds the banks use semi-annual compounding. Suppose that interest rates are expected to change (increase or decrease) instantaneously by 50 basis points. How do the net worth of each bank change with changes in the interest rate? What are your recommendations to the CFOs of Bank A and Bank B? Please explain carefully