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1. Consider a quote from a 2016 academic working paper entitled "Multifaceted Aid for Low-Income Students and College Outcomes: Evidence from North Carolina." The quote is: "Launched in 2004, the Carolina Covenant combines grant-heavy financial aid with an array of non-financial supports for low-income students at an elite public university. We find that the program increased four-year graduation rates by about 8 percentage points for eligible students in the cohorts who experienced the fully developed program." Suppose the graduation rate for eligible students had been 32 percent before the program. Fill in the blank for this alternate conclusion: "We find that the program increased four-year graduation rates by about _-_- percent for eligible students in the cohorts who experienced the fully developed program." (Record your answer as an integer.)
Question 3 1 pts A researcher is studying the percent of young adults aged 18 to 21 who vote in federal elections. After assessing a program to encourage young adults to vote, a report states: "The program can increase voting of young adults by 0.6 percentage points (1.0 percent)." Without the program, what percent of young adults vote in federal elections? (Record your answer as an integer.)

2.On a balance $B, the amount of interest earned in year 2 is $200, and the amount of discount earned in year 3 is $225. Find the interest rate i and the discount rate d.

3. A bank with a leverage ratio of 20 has a cost of debt of 1.5%pa and a portfolio of assets with an expected yield of 3.5%pa. What are the expected ROA net of debt funding costs and the expected ROE of the bank, using the approach to defining leverage taken in the lecture slides? Show your workings. (2 marks)

2) What will the ROA and ROE actually be if the yield on assets turns out to be 3%? Show your workings. (1 mark)

3) What will the ROA and ROE actually be if the yield on assets turns out to be 1%? Show your workings. (2 marks)

4) Redo the above calculations in parts 1) and 3) for a leverage ratio of (i) 10 (ii) 30? What effect does a higher leverage ratio have on your answers? Show your workings. (3 marks)

5) What is the relationship between a bank’s capital ratio and the risks and returns faced by (i) its depositors and (ii) its shareholders? Explain your answers.