Consider two local banks Bank A has 100 loans outstanding, each for $1.0 million, that it expects will be repaid today. Each loan bank is not repaid anything. The chance of default is independent across all the loans. Bank B has only one loan of $100 million outstanding, which it also expects will be repaid today It also has a 5% probability of not being repaid Calculate the following: a. The expected overall payoff of each bank b. The standard deviation of the overall payoff of each bank COO a. The expected overall payoff of each bank, The expected overall payoff of Bank A is $95 million (Round to the nearest integer) The expected overall payoff of Bank B is $95) million (Round to the nearest integer) b. The standard deviation of the overall payoff of each bank. The standard deviation of the overall payoff of Bank A is 2 17% The standard deviation of the overall payoff of Bank B is 21 70% (Round to two decimal places) (Round to two decimal places)
Consider two local banks Bank A has 100 loans outstanding, each for $1.0 million, that it expects will be repaid today. Each loan bank is not repaid anything. The chance of default is independent across all the loans. Bank B has only one loan of $100 million outstanding, which it also expects will be repaid today It also has a 5% probability of not being repaid Calculate the following: a. The expected overall payoff of each bank b. The standard deviation of the overall payoff of each bank COO a. The expected overall payoff of each bank, The expected overall payoff of Bank A is $95 million (Round to the nearest integer) The expected overall payoff of Bank B is $95) million (Round to the nearest integer) b. The standard deviation of the overall payoff of each bank. The standard deviation of the overall payoff of Bank A is 2 17% The standard deviation of the overall payoff of Bank B is 21 70% (Round to two decimal places) (Round to two decimal places)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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