Suppose that MBLA Bank knows that for loans it issues it will either be repaid in full (including interest), repaid exactly half of what is owed (including interest), or repaid nothing at all. MBLA Bank also knows that there is a 13.7 percent chance that it will be repaid exactly half of what is owed, and a 4.3 percent chance that it will be repaid nothing at all. What effective rate of interest should MBLA Bank charge in order to obtain an expected yield rate of 9.6 percent effective? (Note: Assume these loans are to be repaid with a single payment in one year.)
Answer = percent.