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A bank has made a loan to a firm. The terms include a base rate of 8%, a risk premium of 3%, an origination fee
A bank has made a loan to a firm. The terms include a base rate of 8%, a risk premium of 3%, an origination fee of .1875%, and a 9% compensating balance requirement. Required reserves at the Federal Reserve are 6%. What is the ROA on this loan? k=1+of+(BR+O) -1 1-[b(1-RR)] 13.08% 11.90% 12.39% 12.22%
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