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A bank offers one-year loans with a 9 percent stated rate, charges a 0.4 percent loan origination fee, imposes a 15 percent compensating balance requirement,

A bank offers one-year loans with a 9 percent stated rate, charges a 0.4 percent loan origination fee, imposes a 15 percent compensating balance requirement, and must pay a 5 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?

12.1%

12.5%

10.3%

11.0%

10.1%

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