The issue at hand for Mr. Gonzalez is whether or not to make the loan requested. If he were to grant the loan, Mr. Gonzalez would have to address the following issues:

1 Amount of the loan 2. Term for which the loan should be made 3. Profit margin of the transaction when considering that currently MHIBC pays its

depositors an annual rate of interest of 5.50 percent, its FDIC insurance premium on assessable deposits amounts to 0.037 percent per annum, legally required reserves have been set at 3.00 percent, and the prime rate is 8.00 percent

4. In terms of protection, MHIBC has the following options: take a second mortgage on the properties; take a lien on the product and assignment of profits from sales; pursue both of the alternatives stated above; extend an unsecured loan, based on the excellent relationship with Mr. Fulano and the bank's desire to help its valued depositors.

5. What kind of information should the bank request Mr. Fulano to include in the letter of credit application provided in Exhibit 1?