Belize bank has made a loan to angelus press. The loan terms include a default risk- free borrowing rate (base rate) of 8 percent, a risk premium of 3 percent, an origination fee of 0.25 percent, and a 8 percent compensating balance requirement. Required reserves at the Fed are 10 percent. What is the expected or promised gross return on the loan? [12 marks]

SECTION III [ 412=48 Marks ] Answer any four out of five questions. 1. Belize bank has made a loan to angelus press. The loan terms include a default risk-free borrowing rate (base rate) of 8 percent, a risk premium of 3 percent, an origination fee of 0.25 percent, and a 8 percent compensating balance requirement. Required reserves at the Fed are 10 percent. What is the expected or promised gross return on the loan? [12 marks]