1. A bank offers one-year loans with a 4 percent stated rate, charges a 0.1 percent loan origination fee, imposes a 19 percent compensating balance requirement, and must pay a 15 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?
2. 6.3%
3. 4.9%
4. 4.6%
5. 6.0%
6. 3.9%

QUESTION 8

1. An FI is planning to issue $12,000,000 in commercial loans. It will finance all of it by issuing demand deposits. What is the minimum capital required if there are no reserve requirements?
2. $1,152,000
3. $768,000
4. $960,000
5. $902,400
6. $1,286,400