The reserve requirement rr is 10 and the loan amount is 1, Financial Management

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The reserve requirement rr is 10 and the loan amount is 1

A bank has a base lending rate of 10% (BR), and charges a certain customer a 150 basis point risk premium (m). The bank also charges a 1.5% origination fee (f). The bank requires the borrower to maintain compensating balances (b) of 10% of the loan amount. The reserve requirement (RR) is 10% and the loan amount is $1 million. What is ROA of the loan?

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Financial Management: The reserve requirement rr is 10 and the loan amount is 1

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Financial Management: The reserve requirement rr is 10 and the loan amount is 1

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