Consider a bank with $35,000,000 in gross residential mortgage loans, and its historic losses have been 0.91% on its residential mortgage loans. If the bank wants to net a 5% return on its residential mortgages, what rate should it charge to compensate for its losses? Show your work.

1. How much will the bank lose on residential mortgages?

2. How many residential mortgage loans will be paid in full?

3. How much interest income will the bank make on the residential mortgage loans that are paid in full?

4. How many dollars will the bank have received at yearend from its residential mortgage loans?

5. What percentage of $35,000,000 is this amount of yearend total funds?

Answer rating: 100% (QA)

9 b Loss From Residential loss Rut... View the full answer