A bank's total assets are comprised of $56 million in loans and $4 million in reserves. The contract rate on loans is 13% and it has a bad loan ratio of 8%, and a recovery rate of 75%. It has deposits of $52 million. The explicit interest rate on deposits is 4% and the cost of free checking, free travelers checks and other free services is 2%. All liabilities are deposits. Fixed operating costs are $812,600.
1. The realized rate or realized yield on loans is?
2. Bank ROE?
3. What is the real bills or commercial bills doctrine?
4. and 5. Graph and explain bank technical and allocative efficiency and technological change. Be specific.