Multiple Choice
An FI funds a $5 million residential mortgage in 2017 by allocating capital and by issuing demand deposits.The mortgage represents a loan-to-value of 70 percent.The demand deposits have a reserve requirement of 10 percent and a deposit insurance premium of 23 basis points. What would have been the capital requirements if the FI had securitized the mortgage?
A) $0.
B) $400,000.
C) $200,000.
D) $500,000.
E) $5,000,000.
Correct Answer:
Verified
Correct Answer:
Verified
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