A specific $10 mln loan earns 2% per year in fees, and the loan is priced at a 4% spread over the cost of funds for the bank. Because of collateral considerations, the loss to the bank in the case of the borrowers default will be 20% of the loans face value. The expected probability of default is 3%. What is the anticipated return on this loan? What is the risk of the loan? (10 marks)