Question
Consider the following scenario: an FI charges a 0.5% loan origination fee and imposes an 8% compensating balance requirement to be held as non-interest-bearing demand
Consider the following scenario: an FI charges a 0.5% loan origination fee and imposes an 8% compensating balance requirement to be held as non-interest-bearing demand deposits. It further sets aside reserves held at the central bank. The value of these reserves is 10% of deposits. The base lending rate is 9% and the credit risk premium for a specific borrower is 3%. What is the ROA on the loan?
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
