Given the following information, what is expected loss of a $200,000 loan in percent? Probability of default 0.30% Loss given default 55.00% .15% .22% .33% .17%
QUESTION 7
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Given the following information, what is expected loss of a $200,000 loan in percent?
Probability of default 0.30%
Loss given default 55.00%
.15%
.22%
.33%
.17%
QUESTION 8
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A bank reviewed over 800 automobile loans belonging to risk category 3 borrowers. If the bank uses a confidence level of 99.25%, what is the economic capital or loan at risk of a $200,000 loan? The historical losses in ascending order is as follows:
Loan
1 0
2 0
3 0
4 0
. .
. .
. .
790 2.15
791 2.25
792 2.35
793 2.46
794 2.57
795 2.64
796 2.71
797 2.73
798 2.77
799 2.85
800 2.91
$2,570.00
$5,280.00
$5,140.00
$4,920.00
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Hi student
Since there are multiple questions, we will answer only first question.
Probability of default means likelihood that a borrower will not repay loan as per loan agreement terms. Loss given default means estimated amount that a bànk will loss if borrower defaults on a loan.
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