A FI has issued a one-year $1 million CD paying 5.75% to fund a one-year $1 million CD paying an interest rate of 6%, the principle of the loan will be paid in two installments: $500,000 in six months and the balance at the end of the year. According to this situation and from the Maturity Model point of view, if interest rate falls to 4%. Answer the following questions:

1- Will the FI face the interest rate risk exposure?

2- Why?

3- Justify your argument in 2 by showing the required calculations?