Question: Suppose that a bank does the following: a. Sets a loan rate on a prospective loan with BR = 4.23% and = 3.16%. b. Charges

Suppose that a bank does the following:

a. Sets a loan rate on a prospective loan with BR = 4.23% and = 3.16%. b. Charges a 0.33 percent loan origination fee to the borrower. c. Imposes a 9 percent compensating balance requirement to be held as noninterest-bearing demand deposits. d. Holds reserve requirements of 8 percent imposed by the Federal Reserve on the banks demand deposits.

Calculate the banks ROA on this loan.

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