Calculate the bank return on loan

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Suppose that a bank wants to issue a loan to a client with risk premium of 4,0%. Base rate on the market is 8% and the origination fee is 0,52%. The bank imposes 5% compensating balance requirement to be held in a non-interest bearing deposit account and the central bank reserve requirement is 10%. Alternatively, the bank can issue a loan commitment with 0,1% front end fee, 0,25% back end fee and expected takedown of 84%

Calculate the bank's return on this loan.

Calculate the bank's return on this loan commitment (answers as %; accuracy of 2 decimal places X,xx% for both tasks in Question III)

Reference no: EM133119494

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