Multiple Choice
The following is information on current spot and forward term structures (assume the corporate debt pays interest annually) :
-The duration of a soon to be approved loan of $10 million is four years.The 99th percentile increase in risk premium for bonds belonging to the same risk category of the loan has been estimated to be 5.5 percent. If the fee income on this loan is 0.4 percent and the spread over the cost of funds to the bank is 1 percent,what is the expected income on this loan for the current year?
A) $40,000.
B) $100,000.
C) $140,000.
D) $180,000.
Correct Answer:
Verified
Correct Answer:
Verified
Q28: Which of the following is NOT characteristic
Q36: At some point, further increases in interest
Q57: Commercial paper has become an acceptable substitute
Q58: The probability that a borrower would default
Q98: Long-term loans are more likely to be
Q105: Credit rationing by an FI<br>A)involves restricting the
Q106: The following is information on current spot
Q109: The following is information on current spot
Q111: Which of the following observations concerning floating-rate
Q113: Which of the following is NOT characteristic