& Click Submit completament Question 14 30 points CLO Abar is planning to make a san of $10 milion opory in the tele industry. The duration of the loan to be approved is four years. The sperarthe increase in premium for bonds belonging to the same In addon, the bank expects to there income this loan of 0.5 pertant and a spread over the cost of funds of percent Finally, the cost of funds the NAROC benchmark for the 10 percent 1- Compute then the curent average level of interest rates for this canegory of bonds is 10 percent markal 2-the RAROC mot Junity your [10 m mine whether the bank should make What should be the duration in order to the loan to be appro For the press ALT BI VS PALT-10Ma Ard 48 1 +00 10p Reming Time: 57 minutes, 59 seconds Question Complet 14 Question 1414 Question 14 CLO A bank planning ategory of t maka a loan of $10 million to a firm in t been estimated to be 5.5 percent textile industry. The duration of the loan to be approved is four years. The 99 percentle increase in risk premium for bonds belonging to the same mark In addition, the bank expect to charge a fee income on this loan of 0.5 percent and a spread over the cost of funds of 1 percent. Finally, the cost of funds (the RAROC benchmark for the bank is 10 1-Compute the loan risk if the curent everage level of interest rates for this category of bonds is 10 percent? 2-Using the RAROC model demine whether the bank should make the loan? Justify your answer [10 mark 3-What should be the duration in order to this on to be approved 5 marka For the toother, press ALT-F10PC) or ALT-FN-810 (Ma BIVS Paragraph Arial 10pt E A A IXO 52 xx, 1. 8 Ock Submit in complete this assessment. of the merears D WORDY POWORD BY TAY & Click Submit completament Question 14 30 points CLO Abar is planning to make a san of $10 milion opory in the tele industry. The duration of the loan to be approved is four years. The sperarthe increase in premium for bonds belonging to the same In addon, the bank expects to there income this loan of 0.5 pertant and a spread over the cost of funds of percent Finally, the cost of funds the NAROC benchmark for the 10 percent 1- Compute then the curent average level of interest rates for this canegory of bonds is 10 percent markal 2-the RAROC mot Junity your [10 m mine whether the bank should make What should be the duration in order to the loan to be appro For the press ALT BI VS PALT-10Ma Ard 48 1 +00 10p Reming Time: 57 minutes, 59 seconds Question Complet 14 Question 1414 Question 14 CLO A bank planning ategory of t maka a loan of $10 million to a firm in t been estimated to be 5.5 percent textile industry. The duration of the loan to be approved is four years. The 99 percentle increase in risk premium for bonds belonging to the same mark In addition, the bank expect to charge a fee income on this loan of 0.5 percent and a spread over the cost of funds of 1 percent. Finally, the cost of funds (the RAROC benchmark for the bank is 10 1-Compute the loan risk if the curent everage level of interest rates for this category of bonds is 10 percent? 2-Using the RAROC model demine whether the bank should make the loan? Justify your answer [10 mark 3-What should be the duration in order to this on to be approved 5 marka For the toother, press ALT-F10PC) or ALT-FN-810 (Ma BIVS Paragraph Arial 10pt E A A IXO 52 xx, 1. 8 Ock Submit in complete this assessment. of the merears D WORDY POWORD BY TAY
