Question: Question 3.1 (5 marks) A bank has a listed prime rate of 7%. They have estimated that the marginal cost of raising funds is 5%,

Question 3.1 (5 marks) A bank has a listed prime rate

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3.1 (5 marks) A bank has a listed prime rate of 7%. They have estimated that the marginal cost of raising funds is 5%, their default risk premium on a loan is 1.5% and that they want a profit margin of 2%. They have also estimated that the term risk premium is .5%. What is the interest rate this bank will charge if they use the cost plus pricing model? 3.2 (5 marks) A borrower has asked for a 20-year mortgage to purchase a home in the capital city. The house's purchase price is VND 15,000,000, of which VND 12,500,000 is borrowed. If the APR on this loan is 14%, how much will the borrower's total financing charges be

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