Question: 10. Use the following information on a one-year loan commitment to calculate the return on the loan commitment. BR= FI's base interest rate on the

10. Use the following information on a one-year loan commitment to calculate the return on the loan commitment. BR= FI's base interest rate on the loans =8% = Risk premium on loan commitment =2.5% f1= Upfront fee on the whole commitment =25 basis points f2= Back-end fee on the average unused portion of the commitment =50 basis points b= Compensating balance on loans =10% RR= Reserve requirements =8% td= Expected (average) takedown rate on the loan commitment =70%

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