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The Metrobank offers one year loans of $ 1 , 0 0 0 , 0 0 0 each with a stated rate of 9 %
The Metrobank offers one year loans of $ each with a stated rate of charges a loan origination fee, imposes a compensating balance requirement, and must hold a reserve requirement against the compensating balance requirement with the Federal Reserve Bank of Chicago. What is the return to the bank on this loan? Today, the Federal Reserve System has dropped the reserve requirement ratio to zero. Compute the return to the bank on this loan under this change in the reserve requirement ratio.
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