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An Fl funds a $5 million residential mortgage in 2017 by allocating capital and by issuing demand deposits. The mortgage represents a loan-to-value of 70
An Fl funds a $5 million residential mortgage in 2017 by allocating capital and by issuing demand deposits. The mortgage represents a loan-to-value of 70 percent. The demand deposits have a reserve requirement of 10 percent and a deposit insurance premium of 23 basis points. What is the minimum capital requirement on the mortgage in order for the institution to be adequately capitalized? $0. $400,000. $200,000. $500,000. $5,000,000
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