Question: Question 6 (5 points) A bank has made a loan commitment to a firm. The loan terms include a base rate of 6%, a risk

Question 6 (5 points) A bank has made a loan commitment to a firm. The loan terms include a base rate of 6%, a risk premium of 3%, an origination fee of 0.1875%, and a 9% compensating balance requirement. Required reserves at The Fed are 6%. What is the ROA on the loan if the credit facility is a line of credit with a 50% expected take- down rate and a back-end fee of 80 bps (.8%) on the unused portion? of +(BR+O) 1+k=1+ 1-[b(-RR)] 1+k=1+ fi+f2 (1-td) + (BR +D)td td - (b(td)(1 - RR)] 12.29% 12.02% 11.11% 13.08%

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