from the uniform distribution [0,10]. If the household’s income is lower than “A”, it decides to default. Suppose the default probability is 0.2. Calculate the expected value of income conditional on the default, i.e. E[e|default].

from the uniform distribution [0,10]. If the household’s income is lower than “A”, it decides to default. Suppose the default probability is 0.2. Calculate the expected value of income conditional on the default, i.e. E[e|default].

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Suppose a household’s income e is randomly drawn from the uniform distribution [0,10]. If the household’s income is lower than “A”, it decides to default. Suppose the default probability is 0.2. Calculate the expected value of income conditional on the default, i.e. E[e|default].

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