Consider the following two banks:

Bank $1$ has assets composed solely of a $10-$year, $11\mathrm{.}00$ percent coupon, $$1\mathrm{.}6$ million loan with a $11\mathrm{.}00$ percent yield to maturity. It is

financed with a $10-$year, $10$ percent coupon, $$1\mathrm{.}6$ million CD with a $10$ percent yield to maturity.

Bank $2$ has assets composed solely of a $7-$year, $11\mathrm{.}00$ percent, zero$-$coupon bond with a current value of $$1,133,012\mathrm{.}90$ and a maturity

value of $$2,352,316\mathrm{.}24.$ It is financed by a $10-$year, $5\mathrm{.}25$ percent coupon, $$1,600,000$ 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? $($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$.,32\mathrm{.}16))$ Consider the following two banks:

Bank $1$ has assets composed solely of a $10-$year, $11\mathrm{.}00$ percent coupon, $$1\mathrm{.}6$ million loan with a $11\mathrm{.}00$ percent yield to maturity. It is financed with a $10-$year, $10$ percent coupon, $$1\mathrm{.}6$ million CD with a $10$ percent yield to maturity.

Bank $2$ has assets composed solely of a $7-$year, $11\mathrm{.}00$ percent, zero$-$coupon bond with a current value of $$1,133,012\mathrm{.}90$ and a maturity value of $$2,352,316\mathrm{.}24.$ It is financed by a $10-$year, $5\mathrm{.}25$ percent coupon, $$1,600,000$ 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? $($Do not round intermediate calculations. Negative amounts should be indicated by a minus sign. Enter the answers in dollars, not millions of Asset Value Liabilities Value

Before Interest

Rise After Interest

Rise Difference Before Interest

Rise After Interest

Rise Difference

Bank $1$

Bank $2$