Suppose you are asked to make a loan for 10% from one year for now; you decided
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Suppose you are asked to make a loan for 10% from one year for now; you decided to compare interest rates with Government bonds and make at least 2% premium over that. One year bond has 5% and two year rate 7%. You have been harmed about liquidity risk, so you evaluated it at 0.5%. Given this data, are you willing to make a loan?
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To determine whether its profitable to make a loan we need to consider the interest rates on governm...View the full answer
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Related Book For 
Financial Markets And Institutions
ISBN: 9781292215006
9th Global Edition
Authors: Stanley Eakins Frederic Mishkin
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