Problem (1): Answer the following questions:
Abu Dhabi Commercial Bank (ADCB) has the following sources of funds: $300 million in capital and surplus, $325 million in demand deposits, $680 million in time and savings deposits, and $200 million in subordinated debt.
a. Explain with calculation what is the maximum dollar amount of real estate loans that ADCB can grant? (2.5 marks)
b. Explain with calculation what is the maximum dollar amount ADCB bank may lend to a single customer? (2.5 marks)
Problem (2): Answer the following question:
Describe the essential differences between the following deposit pricing methods in use today: cost-plus pricing, and conditional pricing.
Problem (3): Answer the following questions:
1. A customer wants to borrow $1,200 from Edmond State Bank. Edmond State Bank has an add-on loan with an interest rate of 12 percent and monthly payments for one year. What are the monthly payments this customer will need to make on this loan?
2. A customer wants to borrower $25,000 for one year from TRC State Bank. The bank offers a discount loan with an interest rate of 15 percent. How much of the loan will be available to the customer?
3. A customer is seeking a $150,000 home mortgage. The bank requires the customer to pay 1¾ points up front. How much of the loan amount will actually be available to the customer if the bank approves the loan?
Problem (4): Answer the following question:
A bank has determined the information below for one of its customers. This customer wants to borrow $1,000,000 but will maintain an average deposit balance in its account of $200,000. Calculate the expected net rate of return on this loan?
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