In concept,the RAROC measure indicates a loan is acceptable if the RAROC is greater than the

Question

Quizplus · Accepted Answer

RAROC (Risk-Adjusted Return on Capital) is used by banks and lending institutions to assess the profitability of loans and investments, taking into account the risk involved. A loan is considered acceptable if the RAROC is greater than the lender's ROE (Return on Equity), as it indicates that the loan generates a return higher than the lender's cost of equity, making it a profitable endeavor for the lender.

In Concept,the RAROC Measure Indicates a Loan Is Acceptable If