Explanation:
RAROC =
Therefore:
RAROC =
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Q.2964 Supposing we are given the following information for a loan:
$89.5 million is the expected revenue$8.89 million is the operating cost$50.98 million is the tax expense$10 million is the expected loss$24.01 million is the return on risk capital$69.5 million is the economic capitalWhat is the RAROC for the loan?
A
0.7867
B
0.4537
C
0.6279
D
0.8794
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