Question: Assume a basic bank as illustrated in the table, with bank equity of $50. RL = interest rate charged on a loan RD = interest
Assume a basic bank as illustrated in the table, with bank equity of $50. RL = interest rate charged on a loan RD = interest rate charged on a deposit RG = interest rate on government bonds, which is fixed at 4 percent Assets Liabilities Loans Deposits Gov't Bonds Equity Your bank is choosing between two alternatives (decision sets A and B), with the following marketing estimates: Decision Set A Choosing RL = 8 percent, then customers will demand $150 of loans. Choosing RD = 3 percent, then customers will supply $145 of deposits. Decision Set B Choosing RL = 9 percent, then customers will demand $120 of loans. Choosing RD = 5 percent, then customers will supply $120 of deposits. What is your bank's ROE under decision set A? (State your answer as percent and round to two decimal places; i.e. four and a quarter percent is 4.25)
It is for ROE!!!!!!!!
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