Question
2. Metrobank offers one-year loans with a 9 percent stated or base rate, charges a 0.25 percent loan origination fee, imposes a 10 percent compensating
2. Metrobank offers one-year loans with a 9 percent stated or base rate, charges a 0.25 percent loan origination fee, imposes a 10 percent compensating balance requirement, and must hold a 6 percent reserve requirement at the Federal Reserve. The loans typically are repaid at maturity.
-
If the risk premium for a given customer is 2.5 percent, what is the simple promised interest return on the loan?
-
What is the contractually promised gross return on the loan per dollar lent?
-
Suppose this is a loan commitment instead of a spot loan. The back-end fee is 25 basis points on the unused portion of the loan and all other terms are the same. The customer is expected to draw down 80 percent of the commitment at the end of three months. What is the contractually promised gross return on the loan commitment?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started