Suppose that a bank does the following: a. Sets a loan rate on a prospective...
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Accounting
Suppose that a bank does the following:
a. Sets a loan rate on a prospective loan with BR = 5.91% and $ = 6.76%.
b. Charges a 0.70 percent loan origination fee to the borrower.
c. Imposes a 16 percent compensating balance requirement to be held as noninterest-bearing demand deposits.
d. Holds reserve requirements of 7 percent imposed by the Federal Reserve on the bank's demand deposits.
Calculate the bank's contractually promised return (or ROA) on this loan. Note: Convert your answer to percentage format. Enter your answer rounded to 2 decimals, and without any units. So, for example, if your answer is 3.4568%, then just enter 3.46.
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