Assignment:
Q1. In a bank valuation, the amount of current loan loss provision is not deducted from the DCF result. Why is it then important to analyze the adequacy of the bank’s current loan loss provisions?
Q2. In the economic spread analysis, a tax penalty is allocated to a bank’s interest spread on loans, but no tax credit is allocated to the interest spread on deposits. Why does that not violate the Modigliani and Miller theorem?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.