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Please and thank you! QUESTION 23 The duration of a soon to be approved loan of $10 million is four years. The 99th percentile increase

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QUESTION 23 The duration of a soon to be approved loan of $10 million is four years. The 99th percentile increase in risk premium for bonds belonging to the same risk category of the loan has been estimated to be 5.5%. Suppose the current average level of interest rates for this category of bonds is 12%, the fee income on this loan is 0.4% and the spread over the cost of funds to the bank is 1%. What is the estimated risk- adjusted return on capital ( RAROC) of this loan? O 6.36% O 7.00% 7.13% 10.55% 25.45%

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