What is the essential idea behind RAROC?
A. Evaluating the actual or contractually promised annual ROA on a loan.
B. Analyzing historic or past default risk experience.
C. Balancing expected interest and fee income less the cost of funds against the loan's expected risk.
D. Extracting expected default rates from the current term structure of interest rates.
E. Dividing net interest and fees by the amount lent.
Ans: C. Balancing expected interest and fee income less the cost of funds against the loan's expected risk.
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Employee Y, who is 44 years old, is provided with $120,000 of nondiscriminatory group term life insurance by his employer. Based on the IRS uniform premium cost table, the total annual cost of a policy of this type is $1.20 per $1,000 of coverage. Y's required contribution to the cost of the policy is $4.00 per month. Y was covered for the entire year. How much of the cost must Y include in his income?
a) $96 b) $0 c) $84 d) $36
The creator of a life estate may retain what interest in the life estate?
A Remainder interest. B. Revisionary interest. C. Simple interest. D. Dower rights.