Question 38

Metrobank offers one-year loans with a 7.2 per cent stated or base rate, charges a 0.16 per cent loan origination fee, imposes a 12 per cent compensating balance requirement and must pay a 5 per cent reserve requirement to the central bank. The loans typically are repaid at maturity. If the risk premium for a given customer is 2.7 per cent, the contractually promised gross return on the loan per dollar lent is _____% (two decimal places)