Capital Management Corp. is a depository institution that must maintain a Tier 1 capital ratio of 8%. It is considering using its US$ 10 billion in T1 capital to lend through 4 different types of loan portfolios. Its cost of funding is 1.50%. What is the return on regulatory capital for the BBB-rated loan portfolio? Assume they use their entire T1 capital to lend only to the one segment (Note: all rates are stated p.a.) AAA-rated loans with a 20% risk weight, a 2.05% interest rate, and a 0.05% expected loss rate A-rated loans with a 50% risk weight, a 2.35% Interest rate, and a 0.10% expected loss rate BBB-rated loans with a 100% risk weight, a 3.00% interest rate, and a 0.50% expected loss rate B-rated loans with a 150% risk weight, a 8.50% interest rate, and a 4.00% expected loss rate 1.00% 12.50 18.75% 31.25 Capital Management Corp. is a depository institution that must maintain a Tier 1 capital ratio of 8%. It is considering using its US$ 10 billion in T1 capital to lend through 4 different types of loan portfolios. Its cost of funding is 1.50%. What is the return on regulatory capital for the BBB-rated loan portfolio? Assume they use their entire T1 capital to lend only to the one segment (Note: all rates are stated p.a.) AAA-rated loans with a 20% risk weight, a 2.05% interest rate, and a 0.05% expected loss rate A-rated loans with a 50% risk weight, a 2.35% Interest rate, and a 0.10% expected loss rate BBB-rated loans with a 100% risk weight, a 3.00% interest rate, and a 0.50% expected loss rate B-rated loans with a 150% risk weight, a 8.50% interest rate, and a 4.00% expected loss rate 1.00% 12.50 18.75% 31.25