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Financial Risk Manager Part 2

Financial Risk Manager Part 2

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What is the after-tax RAROC for this loan?

  • Expected loss: 2.0% of face value of loan
  • Annual operating costs: 0.5% of face value of loan
  • Economic capital required to support the loan: 10.0%
  • Average pre-tax return on economic capital: 1.4%
  • Effective tax rate: 38%
  • Other transfer costs: JPY 0

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