In Concept,the RAROC Measure Indicates a Loan Is Acceptable If

question 17

Multiple Choice

In concept,the RAROC measure indicates a loan is acceptable if the RAROC is greater than the

• A)borrower's ROE.
• B)lender's ROA.
• C)borrower's ROA.
• D)lender's ROE.
• E)NCO rate.

---

Definitions:

Other Expenses

Costs that do not directly relate to the main business activities, such as administrative and organizational expenses.

Unrealized Loss Account

An account that reflects losses which have occurred on paper due to changes in market values but have not been actually realized through a transaction.

Short-Term Stock Investments

Investments in stock intended to be held for a short duration, typically less than one year, for earning a quick profit.

Fair Value

The estimated market value of an asset or liability, based on current prices in an active market.