4. a) A corporate client of a bank submitted an application to borrow $2 million for one year. How would you price this loan if the prevailing prime rate is 8%, the marginal funding cost of the lending bank is 4%, the banks operating cost is estimated at 3%, while the default risk premium is 2% and the banks profit margin is estimated at 1%? (5%) b) An applicant is requesting a 10 years housing loan of $100,000, current mortgage rate is 5%. The principal and interest payments are due from year one. The applicant lists the following information on the loan application: Weight (%) 1) Annual income: $60,000 20% 2) Relations with banks: None 5% 3) Major credit cards: One 10% 4) Age: 35 5% 5) Annual debt service 0% 40% Ratio before the loan 6) Deposit Accounts held: Demand deposit 10% 7) Occupation: Professional 10% The weights of the credit scoring system are given. you are requested to plug in your assessment of the appropriate scores to the various factors in the loan application. You need to find the debt service ratio which together with the other scores would help you and give make a decision whether to accept or decline the housing loan application.