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Question
An FI funds a $5 million residential mortgage in 2012 by allocating capital and by issuing demand deposits. The mortgage represents a loan-to-value of 70 percent. The demand deposits have a reserve requirement of 10 percent and a deposit insurance premium of 23 basis points.
What is the deposit insurance premium on the demand deposits issued to fund the mortgage?
A. $11,756.
B. $12,778.
C. $11,500.
D. $1,150.
E. $9,200.
Answer
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