BSP Corporation borrows from Patriot Bank based on the following pricing details: (1) interest rate of 15.2% per annum on the loan; (ii) loan management fees of 3% of the loan amount per annum; (iii) compensating balance (b) of 9%; and (iv) reserve requirement (RR) of 14%. What is the contractually promised rate of return to the bank from the loan? (Instructions: Please round your answer to 4 decimal places. Please also keep your
BSP Corporation borrows from Patriot Bank based on the following pricing details: (1) interest rate of 15.2% per annum on the loan; (ii) loan management fees of 3% of the loan amount per annum; (iii) compensating balance (b) of 9%; and (iv) reserve requirement (RR) of 14%. What is the contractually promised rate of return to the bank from the loan? (Instructions: Please round your answer to 4 decimal places. Please also keep your
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:BSP Corporation borrows from Patriot Bank based on the following pricing details:
(i) interest rate of 15.2% per annum on the loan; (ii) loan management fees of 3% of
the loan amount per annum; (iii) compensating balance (b) of 9%; and (iv) reserve
requirement (RR) of 14%. What is the contractually promised rate of return to the
bank from the loan?
(Instructions: Please round your answer to 4 decimal places. Please also keep your
answer in decimals, not percentage terms. e.g. if the answer is 7.5437%, enter
0.0754)
Answer:
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