1.Bank 1 has assets composed of a 10-year, 12 percent coupon, $1 million loan with a 12% yield to maturity. It is financed with a 10-year, 10 percent coupon, $1 million CD with a 10 percent yield to maturity.

Bank 2 has assets composed solely of a 7-year, 12 percent, zero-coupon bond with a current value of $894,006.20 and a maturity value of $1,976,362.88. It is financed with a 10-year, 8.275 percent coupon, $1,000,000 face value CD with a yield to maturity of 10 percent.

All securities except the zero-coupon bond pay interest annually.

If interest rates rise by 150 basis points, what is the equity for Bank 1 and 2, respectively, after the interest rate change?

Group of answer choices

a.$6,723.80; $519.18

b.$2,391.71; $389.45

c. $1,478.11; $984.19

d.$1,653; $1,783.17