Metrobank offers one-year loans with a 12 percent stated


Metrobank offers one-year loans with a 12 percent stated rate, charges a 1/2 percent loan origination fee, imposes a 10 percent compensating balance requirement, and must pay a 5 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?

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Financial Management: Metrobank offers one-year loans with a 12 percent stated
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