$4$

Bank $1$ has assets composed solely of a $10-$year, $12$ percent coupon, $$1$ million loan with a $12$ percent yield to maturity. It is financed with a $10-$year, $10$ percent coupon, $$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 $$894,006\mathrm{.}20$ and a maturity value of $$1,976,362\mathrm{.}88.$ It is financed with a $10-$year, $8\mathrm{.}275$ 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.

a$.$ If interest rates rise by $1$ percent $(100$ basis points$),$ what is the difference in the value of the assets and liabilities of each bank? Note: Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter the answers in dollars, not millions of dollars. Round your answers to $2$ decimal places. $($e$.$g$.,32\mathrm{.}16)$