What is the expected or promised gross return on the loan

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Confidence Bank has made a loan to Risky Corporation. The loan terms include a default risk-free borrowing rate of 8 percent, a risk premium of 3 percent, an origination fee of 0.1875 percent, and a 9 percent compensating balance requirement. Required reserves at the Fed are 6 percent.  What is the expected or promised gross return on the loan?

a. 11.19 percent.

b. 11.90 percent.

c. 12.29 percent.

d. 12.02 percent.

e. 12.22 percent.

Can you give me a process?

Reference no: EM131828929

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