Response to the following questions:
1. Countrybank offers one-year loans with a stated rate of 10 percent but requires a compensating balance of 10 percent. What is the true cost of this loan to the borrower?
2. Metrobank offers one-year loans with a 9 percent stated rate, charges a ¼ percent loan origination fee, imposes a 10 percent compensating balance requirement, and must pay a 6 percent reserve requirement to the Federal Reserve. What is the return to the bank on these loans?