Answer: 2.07%

## RAROC Calculation Explanation RAROC (Risk-Adjusted Return on Capital) is calculated as: \[\text{RAROC} = \frac{\text{After-tax expected risk-adjusted net income}}{\text{Economic capital}}\] ### Step 1: Calculate Economic Capital \[\text{Economic capital} = \text{CNY 3,800,000,000} \times 0.15 = \text{CNY 570,000,000}\] ### Step 2: Calculate Components - **Expected Revenue (ER)**: \[\text{CNY 3,800,000,000} \times 0.041 = \text{CNY 155,800,000}\] - **Return on Economic Capital (ROEC)**: \[\text{CNY 570,000,000} \times 0.02 = \text{CNY 11,400,000}\] - **Interest Cost (IC)**: \[\text{CNY 3,800,000,000} \times 0.006 = \text{CNY 22,800,000}\] - **Operating Cost (OC)**: \[\text{CNY 3,800,000,000} \times 0.003 = \text{CNY 11,400,000}\] - **Expected Loss (EL)**: \[\text{CNY 3,800,000,000} \times 0.03 = \text{CNY 114,000,000}\] ### Step 3: Calculate Pre-tax Income \[\text{Pre-tax income} = \text{ER} + \text{ROEC} - \text{IC} - \text{OC} - \text{EL}\] \[= 155,800,000 + 11,400,000 - 22,800,000 - 11,400,000 - 114,000,000 = \text{CNY 19,000,000}\] ### Step 4: Calculate Taxes \[\text{Taxes} = \text{CNY 19,000,000} \times 0.38 = \text{CNY 7,220,000}\] ### Step 5: Calculate After-tax Net Income \[\text{After-tax net income} = \text{CNY 19,000,000} - \text{CNY 7,220,000} = \text{CNY 11,780,000}\] ### Step 6: Calculate RAROC \[\text{RAROC} = \frac{\text{CNY 11,780,000}}{\text{CNY 570,000,000}} = 0.02067 = 2.07\%\] Therefore, the after-tax RAROC is **2.07%**, which corresponds to option B.

Author: LeetQuiz .