Commercial Bank of Windhoek has credited Upington Solar Corporation with R550m, with a maturity of two years. Expected loss for Commercial Bank of Windhoek’s loan to Upington Solar Corporation is R16,5m and the recovery rate is assumed to be 23%. Calculate the probability of loan default (PD) for Upington Solar Corporation
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Commercial Bank of Windhoek has credited Upington Solar Corporation with R550m, with a maturity of two years. Expected loss for Commercial Bank of Windhoek’s loan to Upington Solar Corporation is R16,5m and the recovery rate is assumed to be 23%. Calculate the probability of loan default (PD) for Upington Solar Corporation.
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- Tokyo Corporation must pay its supplier P500,000. Tokyo Corp's bank has advertised a 270-day loan with simple interest at a rate of 12 percent. On business loans, the bank requires a 20 percent compensating balance. What is the loan's effective annual rate (rEAR) if Tokyo Corporation currently holds no funds with the lending bank? In your calculations, assume that a year has 360 days. a. 12.00% b. 11.35% c. 15.00% d. 11.25% e. 15.27%ABC Inc. asked your company for a 7-year loan of $50,000. The repayment of the loan will be as follows: ABC will pay $5,000 at the end of Year 1, $10,000 at the end of Year 2, and $15,000 at the end of Year 3, and fixed unspecified cash flow (assume X) at the end of each of the following years (Year 4 through Year 7). Assuming 8% as an appropriate rate of return on low risk but an illiquid 7-year loan. Find out the cash flow that this investment must provide at the end of each of the final 4 years (year 4 to year 7), that is, find out the X?To pay its supplier, Tokyo Corporation requires P300,000. The bank of Tokyo Corporation offers a 210-day loan with a simple interest rate of 11 percent and a compensating balance requirement of 20 percent. Given that there are 360 days in a year and Tokyo Corporation has no funds at the lending bank, what is the annual percentage rate (APR) of the loan? a. 14.14% b. 12.55% c. 8.02% d. 11.00% e. 13.75%
- A bank has estimated its expected (predicted) loan loss rate on its consumer loans at 3.25%. If the bank wishes to earn 8% on it consumer loans, what rate should it charge its customers? 11.34% 11.63% 4.60% 4.35% A lender engages in a 15-day $1,000,000 reverse repo at a rate of 2.50%. The haircut is 2%. The current market value of the loan is $980,000. What rate of return did the lender earn on annualized basis? Use 360-day for annualization. $1,000.42 $810.63 $466.86 $880.37 The following is not an example of a closed-end loan Automobile Loans Home mortgages Recreational vehicle loan Credit Card Core deposits of a commercial bank consist of the following except: Demand deposits Savings deposits Money…Cerise Company would record a note payable of_____, if the terms of the loan with a bank are as follows: Cersie Company would have to make one $102,000 payment in two years. Assume the market interest rate is 10% per year and the company rounds to the nearest dollar. (The present value of $1 for two periods at 10% is 0.82645). a.) $94,498 b.) $84,298 c.) $10,200 d.) $74,098City Bank has made a 10-year, $2 million loan that pays annual interest of 10 percent per year. The principal is expected at maturity. (LG 24-2) a. What should it expect to receive from the sale of this loan if the current market rate on loans is 12 percent? b. The prices of loans of this risk are currently being quoted in the secondary market at bid-offer prices of 88-89 cents (on each dollar). Translate these quotes into actual prices for the above loan. c. Do these prices reflect a distressed or nondistressed loan? Explain.
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