Question: ( 1 ) Using the RAROC model, determine whether the bank should make the loan? Note: Spread = expected interest rate ( e . g

(1) Using the RAROC model, determine whether the bank should make the loan?
Note: Spread = expected interest rate (e.g., current market interest rate for loans)- cost of funds
Group of answer choices
RAROC =8.9% ; Bank should not make the loan.
RAROC =8.9% ; Bank should make the loan.
RAROC =7.94% ; Bank should make the loan.
RAROC =7.94% ; Bank should not make the loan.
RAROC =16.71% ; Bank should make the loan.

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