help me with these answers I have 30 minutes to complete

QUESTION 2

1. A bank is charging a rate of 14.00% on a loan, and the probability of default is 10% with a 40% salvage value.What is the highest required return such that this loan would be made?
2. 16.00%
3. 7.37%
4. 7.16%
5. 7.80%
6. 6.59%

1 points

QUESTION 3

1. Jane Doe earns $31,200 per year and has applied for an $44,715.18, 30-year mortgage at 12 percent interest, paid monthly. Property taxes on the house are expected to be $4800 per year. What is her gross debt service ratio?
2. 28%
3. 31%
4. 33%
5. 37%
6. 41%

1 points

QUESTION 4

1. A bank offers one-year loans with a 11 percent stated rate, charges a 0.2 percent loan origination fee, imposes a 11 percent compensating balance requirement, and must pay a 14 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?
2. 15.8%
3. 11.6%
4. 14.8%
5. 10.4%
6. 12.4%

1 points

QUESTION 5

1. A bank has made 4-year, $6,000,000 loan that pays annual interest of 6 percent. The principal is due in 4 years.The bank is willing to sell this loan with recourse at an 6.6 percent discount rate.The bank also has the option to sell this loan without recourse at a discount rate of 6.8 percent. The bankexpects to receive no interest payments or principal if the loan is defaulted.If the bank estimates a 0.5 percent probability of default on this loan over its 4-year life, what does it expect to receive if the loan is sold with recourse? Is it better off selling this loan without recourse?Why?
2. It expects to receive $5,379,761. It should sell it without recourse, since the expected return is lower than selling it without recourse.
3. It expects to receive $6,607,750. It should sell it with recourse, since the expected return is still higher than selling it without recourse.
4. It expects to receive $6,490,798.It should sell it with recourse, since the expected return is still higher than selling it without recourse.
5. It expects to receive $5,847,566.It should sell it without recourse, since the expected return is lower than selling it without recourse.
6. It expects to receive $5,847,566.It should sell it with recourse, since the expected return is still higher than selling it without recourse.

1 points

QUESTION 6

1. An FI is planning to issue $17,000,000 in commercial loans. It will finance all of it by issuing demand deposits. There is a 13 percent average reserve requirement on demand deposits, all reserves are held in the form of cash, and $100,000 of funding is through equity. Which of the following is a simple balance sheet with total assets and total liabilities and equity, assuming this is the only project funded by the bank?
2. AssetsLiabilities
3. Cash2,640,230Demand deposits 19,540,230
4. Loan17,000,000Equity100,000
5. Total19,640,23019,640,230
6. AssetsLiabilities
7. Cash6,410,344Demand deposits 23,310,344
8. Loan17,000,000Equity100,000
9. Total19,525,28719,525,287
10. AssetsLiabilities
11. Cash2,424,276Demand deposits2,210,000
12. Loan17,000,000Equity17,214,276
13. Total19,424,27619,424,276
14. AssetsLiabilities
15. Cash2,525,287Demand deposits19,425,287
16. Loan17,000,000Equity100,000
17. Total19,525,28719,525,287
18. AssetsLiabilities
19. Cash2,298,011Demand deposits18,259,770
20. Loan17,000,000Equity1,038,241
21. Total19,298,01119,298,011

1 points

QUESTION 7

1. An FI is planning to issue $11,000,000 in commercial loans. It will finance all of it by issuing demand deposits. What is the minimum capital required if there are no reserve requirements?
2. $704,000
3. $1,038,400
4. $792,000
5. $1,056,000
6. $880,000

1 points

QUESTION 8

1. An FI is planning to issue $15,000,000 in commercial loans. It will finance all of it by issuing demand deposits.What is the minimum demand deposits it needs to attract in order to fund this loan if you assume there is a 14 percent average reserve requirement on demand deposits, all reserves are held in the form of cash, and $8,000,000 of funding is through equity?
2. $9,767,442
3. $7,000,000
4. $7,162,791
5. $9,930,233
6. $8,139,535

1 points

QUESTION 9

1. Consider $5,000,000 of 20-year mortgages with a coupon of 5percent paid quarterly.Consider a 20-year CMO using this mortgage pool as collateral. There are three tranches (where A offers the least protection against prepayment and C offers the most). A $1,250,000 tranche A makes quarterly payments of 4 percent; a $2,500,000 tranche B makes quarterly payments of 5 percent; and a $1,250,000 tranche C makes quarterly payments of 6 percent.If the trustee receives quarterly prepayments of $200,000 on the mortgage pool, which of the following is NOT true?
2. Tranche A has a remaining balance of $1,013,267 at the end of Quarter 1.
3. Tranche A receives an interest payment of $12,500 in Quarter 1.
4. Tranche A receives an interest payment of $11,742 in Quarter 2.
5. Tranche A receives a total payment of $249,233 in Quarter 1.
6. Tranche A has a remaining balance of $774,167 at the end of Quarter 2.

1 points

QUESTION 10

1. An FI is planning to give a loan of $5,000,000 to a firm in the steel industry. It expects to charge an up-front fee of 0.5 percent and a service fee of 5 basis points. The loan has a maturity of 8 years. The cost of funds (and the RAROC benchmark) for the FI is 12 percent. The FI has estimated the risk premium on the steel manufacturing sector to be approximately 0.22 percent, based on two years of historical data. The current market interest rate for loans in this sector is 12.30 percent. The 99th (extreme case) loss rate for borrowers of this type has historically run at 5 percent, and the dollar proportion of loans of this type that cannot be recaptured on default has historically been 89 percent. Using the RAROC model, the FI
2. should not make the loan, since RAROC=22.6%
3. should make the loan, since RAROC=24.04%
4. should not make the loan, since RAROC=24.04%
5. should make the loan, since RAROC=22.6%
6. should make the loan, since RAROC=16.83%