The duration of an approved $10 million loan is 4 years. The maximum increase in risk premium for bonds belonging to the same risk category as the loan has been estimated to be 5.5%. What is the capital at risk for the loan if interest rates or this category of loans is 12%? Hint: you are calculating the RAROC denominator. Write this answer down - you will need to use it in Question 13 One Year Net Income On Loan RAROC = Loan (Asset) Risk or Capital at Risk DLN = -DLN * LN * (AR/(1+R)) - $550,000 - $1,564,286 O-$1,964,286 -$2,200,000