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Please help in answering this following homework question (b) (8 marks] Assume henceforth that the RH faces the optimistic NBL tb' = '93 ,1 (1

Please help in answering this following homework question

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(b) (8 marks] Assume henceforth that the RH faces the \"optimistic\" NBL tb' = '93 ,1 (1 +rB), i.e., the RH cannot borrow more than it could feasibly repay if it were to end up in the \"high\" income state 19;; in the second period. Given the interest rate 13 that the bank must pay on deposits, for a loan of size Q > 0 let rB(Q} denote the interest rate at which the bank's expected prot at t = 2 is exactly zero. Obtain a mathematical expression for the function rB{Q) (NOTE: We're not solving for the spread here, just the interest rate on loans itself). (HlNT: You may nd it useful to separater consider a number of different ranges of Q.)

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