1.Metrobank offers one-year loans with a 9 per cent stated or base rate, charges a 0.25 per cent loan origination fee, imposes a 10 per cent compensating balance requirement and must pay a 6 per cent reserve requirement to the central bank. The loans typically are repaid at maturity.

If the risk premium for a given customer is 2.5 per cent, what is the simple promised interest return on the loan?

What is the contractually promised gross return on the loan per dollar lent?

Which of the fee items has the greatest impact on the gross return? LO 10.6