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Question
The duration of a soon to be approved loan of $10 million is four years. The 99th percentile increase in risk premium for bonds belonging to the same risk category of the loan has been estimated to be 5.5 percent.
If the fee income on this loan is 0.4 percent and the spread over the cost of funds to the bank is 1 percent, what is the expected income on this loan for the current year?
A. $40,000.
B. $100,000.
C. $140,000.
D. $180,000.
E. $280,000.
Answer
This answer is hidden. It contains 95 characters.
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