Question
A bank lends out a loan to a borrower, and the loan rate is set at 8% (5% BR + 3% margin). The bank charges
A bank lends out a loan to a borrower, and the loan rate is set at 8% (5% BR + 3% margin). The bank charges 0.125% loan origination fee to the borrower who is required to set aside 10% of deposits as reserves and 8% compensating balance. What is the return on this loan for the bank?
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Venture capital and the finance of innovation
Authors: Andrew Metrick
2nd Edition
9781118137888, 470454709, 1118137884, 978-0470454701
