13. Suppose that an FI holds two loans with the following characteristics. Annual Spread between Loan Rate and FI's cost of funds Loan 1 2 Xi ? ? 6% 4% A. X1 = 50%, X2 = 50% B. X1 = 40%, X2 = 60% C. X1 = 30%, X2 = 70% D. X1 = 20%, X2 = 80% E. X1 = 10%, X2 = 90% Annual Fees 2% 1% Loss to FI Given Default 40% 30% Expected Default Frequency 2.50% 1.50% Correlation -0.1 Using Moody's Analytics Portfolio Manager model, what portfolio weights do you want to put on the two loans in order to make the portfolio expected return equal to 5.04%

Q: Write the methods of Calculating Interest?

A: Methods of calculating interest: The basic and fundamental methods for calculating interests are…

Q: Define compound interest

A: Compound interest: Compound interest is the accumulation of interest to the principal amount of a…

Q: Define Liquidity Analysis?

A: Liquidity analysis is very essential as it shows the ability of the firm in paying short-term bills.…

Q: What can be considered collateral. What is collateral

A: Collateral is an asset or property that a borrower pledges as security for a loan or credit. If the…

Q: What is financial asset market?

A: Financial assets generally include bonds, stocks, mutual funds, cash, deposits with bank etc. These…

Q: what is pooling of Interest Method?

A: The accounting method that governed how the balance sheets of two companies that were merged would…

Q: Define interest.

A: Interest is the amount charged by the lender for the money lend for specific period.

Q: How is the term ‘net realizable value’ defined as used in the acronym LCNRV?

A: Inventory: It implies the current asset that is presented on the balance sheet of the company and…

Q: Define collection policy

A: Introduction: A mutual responsibility between the operating departments, accounts receivables is to…

Q: Define implicit rate of interest.

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…