The duration of a soon to be approved loan of $10 million is four years. The 99th percentile increase in risk


The prolongation of a promptly to be prevailing hypothecation of $10 darling is impure years. The 99th percentile growth in miss

prize for bonds accompanying to the corresponding miss predicament of the hypothecation has been estimated to be 5.5%. The present medium smooth of curiosity-behalf rates for this predicament of bonds is 12%. If the fee allowance on this hypothecation is 0.4% and the stretch balance the absorb of funds to the bank is 1%, compute the estimated RAROC of this hypothecation.

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