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What is the expected rate of return

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Question - A corporate customer obtains a $1.5 million loan from a bank. The customer agrees to pay a 6.25 percent interest rate and agrees to maintain a compensating balance of 4 percent of the loan amount that will be held in noninterest-bearing transactions deposits at the bank for one year. The bank charges a 1 percent loan origination fee on the amount borrowed. Reserve requirements are 10 percent. What is the expected rate of return to the bank (to the nearest basis point)?

Reference no: EM133167074

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