Many analysts argue that RBC requirements should force banks to raise loan rates. Explain this by assuming

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Many analysts argue that RBC requirements should force banks to raise loan rates. Explain this by assuming that a bank’s management sets loan rates to earn a 16 percent ROE. How does the allocation of equity to a loan affect loan pricing?

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Bank Management

ISBN: 978-1133494683

8th edition

Authors: Timothy W. Koch, S. Scott MacDonald

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Question Posted: Nov 03, 2015 05:59 AM

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Many analysts argue that RBC requirements should force banks to raise loan rates. Explain this by assuming

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If management were to target a 16 ROE its net income would have to ...View the full answer

Bank Management

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