Multiple Choice
Consider the following scenario: an FI charges a 0.5% loan origination fee and imposes a 10% compensating balance requirement to be held as non-interest-bearing demand deposits.It further sets aside reserves held at the central bank.The value of these reserves is 15% of deposits.What is the base lending rate if the credit risk premium is 3.055% and the ROA on the loan is 17%?
A) 11.5%
B) 13.945%
C) 12%
D) 20.055%
Correct Answer:
Verified
Correct Answer:
Verified
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