A bank with a two-year horizon has issued a one-year certificate of deposit for $70 million at a variable interest rate of 1 percent. With the proceeds, the bank has purchased a two-year Treasury note that pays 3 percent interest What risk does the bank face in entering into these transactions? Instructions: Enter numeric responses as whole dollar values The bank faces the tisk that the short term interest rate will before the second year. the amount of interest the bank has to pay on the CD, but leaving the interest uncome twat the bank receives from the Treasury note unchanged. With an interest rate of 1 percent for the CD and 3 percent for the Treosury note, the bank's annuat interest income is $ mittion and the bank's annual interest expenses are \$ miltion. The bank makes a profit of \$ multion What would happen if att interest rates were to fise by 1 percent? If the interest rate rises 1 percent, the bank's profit in the second year falls 10$ miltion