What is anticipated return on loan and risk of the loan

Assignment Help Financial Management
Reference no: EM131865536

CountrySide Bank uses Moody’s Analytics Portfolio Manager to evaluate the risk-return characteristics of the loans in its portfolio. A specific $10 million loan earns 2 percent per year in fees and the loan is priced at a 4-percent spread over the cost of funds for the bank. Because of collateral considerations, the loss to the bank if the borrower defaults will be 20 percent of the loan’s face value. The expected probability of default is 3 percent. What is the anticipated return on this loan? What is the risk of the loan?

Reference no: EM131865536

Questions Cloud

Evolution of the concept of gender over generations : Using the module readings, the Argosy University online library resources, and the Internet, research the evolution of the concept of gender over generations.
Purchased key person life insurance policy : Corporation has purchased a key person life insurance policy on its President, a 51% shareholder.
What is dependent variable in the rabbit island experiment : What is the dependent variable in the Rabbit Island Experiment? Also, list all of the independent variables you can think of in the experiment
What was new about deweys ideas : In what ways was your own education consistent or inconsistent with Dewey's ideas about education.
What is anticipated return on loan and risk of the loan : The expected probability of default is 3 percent. What is the anticipated return on this loan? What is the risk of the loan?
Discuss the behavioral theory of learning : There are two primary theoretical perspectives that you will be examining throughout this course-the behavioral approach and the cognitive approach.
Calculate annual rate of return with continuous compounding : Calculate the annual rate of return with continuous compounding associated with this investment.
Evaluate how you would approach this scenario : Evaluate how you, as a special education consultant, would approach this scenario in a collaborative manner with Mr. Santiago.
Analysis on the role of nature vs nurture : The topic will be about" Analysis on the role of Nature vs Nurture on gender development" the first draft with title page, abstract, 2.5 page body.

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd