• Using the following information, calculate the risk-adjusted return.
• Loan Amount: $10,000,000
• Interest Rate: 5.0%
• Cost of Funds: 2.75%
• Fees: 10,000
• Expenses: 5,000
• Loss Given Default Rate: 25%
• Default Probability: 0.5%

• Using the following information, calculate the risk-adjusted capital.

1. Loan Amount: $10,000,000
2. Capital Requirement: 12%
3. Capital Ratio: 25%

• Using the following information, calculate the RAROC.

1. 33.33%
2. 28.75%
3. 38.25%
4. 35.56%

• Using our risk rating and profitability model, compare two scenarios regarding a loan issuance. Compare the ratios of the two scenarios below:

	Scenario 1	Scenario 2
Debt Service Coverage Ratio	1.89	5.19
Adjusted EBITDA/Interest	8.85	9.09
Debt/Equity	0.86	0.86
Total Liabilities/Tangible Net Worth	1.78	1.78
Current Ratio

• If the company's balance sheet is the same for both scenarios, what could have caused the changes in the ratios for Scenario 2?

1. A higher loan amount in any of the loans.
2. Longer amortization period in the loans.
3. Higher interest rates charged for any of the loans.
4. A smaller loan amount in any of the loans.