Consider an FI That Holds Two Loans with the Following

question 39

Multiple Choice

Consider an FI that holds two loans with the following characteristics: What is the return on the loan portfolio (round to two decimals) ?

• A)6.50 per cent
• B)6.90 per cent
• C)13.40 per cent
• D)6.78 per cent

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Definitions:

Direct Transfers

The process of moving assets or capital directly between parties without the use of an intermediary.

Maturities

The dates on which the principal or face value of a debt instrument becomes due and is to be paid to investors.

Capital Market Securities

Financial instruments such as stocks and bonds that are traded in capital markets and represent long-term funding sources for corporations and governments.

Money Markets

Markets where short-term financial instruments and securities are traded, facilitating the lending and borrowing of funds with maturities of one year or less.