What is the return to the bank on these loans

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Question - A bank offers one-year loans with a 11 percent stated rate, charges a 0.2 percent loan origination fee, imposes a 11 percent compensating balance requirement, and must pay a 14 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?

a. 12.4%

b. 14.8%

c. 11.6%

d. 15.8%

e. 10.4%

Reference no: EM132811682

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