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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,

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?

6.3%

4.9%

4.6%

6.0%

3.9%

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