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The bank you work for has a RAROC model. The RAROC model, computed for each specific activity, measures the ratio of the expected yearly net income to the yearly VAR risk estimate. You are asked to estimate the RAROC of its $500 million loan business. The average interest rate is 10%. All loans have the same probability of default of 2% with a loss given default of 50%. Operating costs are $10 million. The funding cost of the business is $30 million. RAROC is estimated using a credit-VAR for loan businesses, in this case, 7.5%. The economic capital is invested and earns 6%. The RAROC is:
A. 19.33%
B. 46.00%
C. 32.67%
D. 13.33%
What is the difference between "simple" and "compound" interest? What are some of the uses of compound interest in business?
Determine the NPV if Cantoon uses the forward rate instead of the spot rate to forecast the future spot rate of the euro, and elects to partially finance the acquisition. You need to derive the 8 years forward rate for this specific question.
transit airlines provides regional jet service in the mid-south. the following is information on liabilities of transit
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write 400ndash600 words that respond to the following questions with your thoughts ideas and comments. this will be the
If the company chooses to drill today, what is the project's net present value? Round your answer to four decimal places.
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Suppose you are a senior vice president of a company that manufactures kitchen appliances. I am planning using robots to replace up to ten of my skilled workers on the factory floor.
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If the company maintains a constant 6 percent growth rate in dividends, what was the most recent dividend per share paid on the stock?
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