A bank has an asset comprising a 12 year bond with 10.00% annual coupons and a yield-to-maturity of 10.00% per annum nominal and a face value of $1,000,000. It is funded by a 6 year deposit with 6.00% annual coupons and a yield-to-maturity of 6.00% per annum nominal and a face value of $900,000. What happens to the market value of equity (based on exact prices) if interest rates increase by 1% at all maturities? Do not use the concept of duration for this question.

Group of answer choices

The market value of equity increases by $22,273

The market value of equity increases by $22,025

There is not enough information to answer this question

The market value of equity falls by $22,025

The market value of equity falls by $22,273