A Bank Has Determined the Information Below for One of Its

question 108

Multiple Choice

A bank has determined the information below for one of its customers.This customer wants to borrow $1,000,000 but will maintain an average deposit balance in its account of $200,000.What is the expected net rate of return on this loan? $$\begin{array} { l r l r } { \text { Expected Revenues } } & &\quad\quad\quad\quad{ \text { Expected Costs } } \\\text { Interest Revenues } & \$ 1,000,000 & \text { Deposit Interest } & \$ 30,000 \\\text { Commitment Fee } & \$ 15,000 & \text { Cost of Other Funds Raised } & \$ 890,000 \\\text { Deposit Service Fees } & \$ 5,000 & \text { Loan Processing Costs } & \$ 8,000 \\\text { Agency Fees } & \$ 6,000 & \text { Activity and Record Keeping } & \$ 16,000 \\& & \text { Costs } &\end{array}$$

• A)10.00 percent
• B)8.20 percent
• C)10.25 percent
• D)13.75 percent
• E)None of the options is correct.

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Definitions:

DSM-5 Diagnosis

The process of identification of mental health and behavioral conditions using the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders.

Antisocial Personality Disorder

A mental health disorder characterized by a disregard for and violation of the rights of others.

Sociopath

A term often used to describe a person with Antisocial Personality Disorder, characterized by a lack of empathy and manipulative or harmful behavior.

Psychopath

A phrase commonly referring to an individual diagnosed with Antisocial Personality Disorder, noted for their absence of empathy and engagement in manipulative or damaging actions.