Question
MTB Bank offers one-year loans with a 9 percent stated or base rate, charges a 0.25 percent loan origination fee, imposes a 10 percent compensating
MTB Bank offers one-year loans with a 9 percent stated or base rate, charges a 0.25 percent loan origination fee, imposes a 10 percent compensating balance requirement, and must hold a 6 percent reserve requirement at the Federal Reserve. The loans typically are repaid at maturity.
If the risk premium for a given customer is 3.33 percent, what is the contractually promised gross return on the loan per dollar lent?
Note: Convert your answer to percentage format. Enter your answer rounded to 2 decimals, and without any units. So, for example, if your answer is 3.4568%, then just enter 3.46.
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