Bank Phoenix gives two one-year loans of N$ 20 million loan to Mr A, and N$ 85 million to Mrs B. The joint probability of default for Mr A and Mrs B is 0.095. Mr A probability of default and LGD are respectively 0.3 and 35%. Mrs B probability of default and LGD are respectively 0.35 and 55 %. Calculate bank PHOENIX one-year expected loss of default.
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Bank Phoenix gives two one-year loans of N$ 20 million loan to Mr A, and N$ 85 million to Mrs B. The joint probability of default for Mr A and Mrs B is 0.095. Mr A probability of default and LGD are respectively 0.3 and 35%. Mrs B probability of default and LGD are respectively 0.35 and 55 %. Calculate bank PHOENIX one-year expected loss of default.
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by Bartleby Expert- A mortgage borrower has an outstanding debt at interest rate of J12= 13.08% and $1,034 monthly payments for 69 months remaining today. Another bank is offering the same monthly payments but for 63 months only at a lower interest rate. For the refinancing, borrower has to pay $1,800 expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.Bank A pays 2% interest compoundedannually on deposits, while Bank B pays 1.75% compounded daily.a. Based on the EAR (or EFF%), which bank should you use?b. Could your choice of banks be influenced by the fact that you might want to withdraw your funds during the year as opposed to at the end of the year? Assume that your funds must be left on deposit during an entire compounding period in order to receive any interest.A bank issues two mortgages M1 and M2 for $1 million each. Both mortgages mature at the end of the year with principle repayment equal to $1 million. M1 has an interest rate of 15% while M2 has an interest rate of 5% and both only pay a single interest payment at maturity. Both borrowers repay full principle plus interest at the end of the year in normal times (probability .95) but default in a recession (probability .05). M1's liquidation value in a recession is $500,000 while M2's liquidation value in a recession is $700,000. The bank creates a mortgage backed security from M1 and M2 which has only two tranches: a senior tranche which has an expected return of 4% and a junior tranche which has an expected return of 13.7%. The MBS pays out all proceeds from the mortgage repayments to the two tranches in each state of the world (i.e. the senior and junior tranche holders are the only stakeholders in the MBS). The senior tranche has priority to be repaid over the junior tranche. What is…
- TBTF Bank makes a 7 year interest only loan to AFC Inc of $4,300,000.00. The interest rate on the loan is i(4) = 8.125%, and the payments will be made annually. TBTF reinvests the payments at an interest rate of i(4) = 5.250%. At maturity, what is TBTF Bank's annual ROI over the lifetime of the loan? (AFC does not default.) a. 8.012% O b. 7.778% O c. 7.856% O d. 7.545% O e. 7.701%A bank that provides overdraft protection charges 12 percent for each $100 (or portion of $100) borrowed when an overdraft occurs. a. What amount of interest would the customer pay for a $188 overdraft? (Assume the interest is for the full amount borrowed for whole year.) b. How much would be saved by using the overdraft protection loan if a customer has three overdraft charges of $30 each during the year?A commercial bank is planning to offer Luna a loan in the amount of $15,000 and the bank figures that Luna will repay the loan in full with probability 0.79 and default otherwise. Also, Luna has asked for an interest rate of 12%. In order for the bank to be able to offer this rate, what is the collateral amount that Luna must offer the bank in the event of default? $8,177.5 $8,228.6 $8,366.9 $8,401.1
- A mortgage borrower has an outstanding debt at interest rate of J12= 6% and 450 TL monthly payments for 69 months remaining today. Another bank is offering the same monthly payments but for 63 months only at a lower interest rate. For the refinancing, borrower has to pay 1200 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives.In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $42,000 and the interest rate is 8.50%, the borrower “pays” 0.0850 × $42,000 = $3,570 immediately, thereby receiving net funds of $38,430 and repaying $42,000 in a year. a. What is the effective interest rate on this loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the effective annual rate on a 1-year loan with an interest rate quoted on a discount basis of 18.50%? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)The bank issued a $200,000 30-year mortgage (monthly payments) with an annual interest rate of 9.4%, compounded monthly. They just received payment number 109 and have decided to sell the loan. The buyer of the loan expects to receive an annual rate of return equal to 8.80%, compounded monthly. For the original bank that issued the loan, what was the internal rate of return? a.9.36% b.7.03% c.9.69% d.10.42% e.8.80%
- Van Buren Resources Inc. is considering borrowing $100,000 for 182 days from its bank. Van Buren will pay $6,000 of interest at maturity, and it will repay the $100,000 of principal at maturity. a. Calculate the loan’s annual financing cost. b. Calculate the loan’s annual percentage rate. c. What is the reason for the difference in your answers to Parts a and b?A mortgage borrower has an outstanding debt at interest rate of J12= 9,08% and 1.158 TL monthly payments for 70 months remaining today. Another bank is offering the same monthly payments but for 64 months only at a lower interest rate. For the refinancing, borrower has to pay 1.900 TL expense today. Decide if the borrower should refinance the debt or not by showing the difference of discounted values of two alternatives. (hint: you must use the same interest rate for discounting two options to be able to compare)4) You borrow $2500 on September 3rd this year. Your demand loan carries an interest rate of 7.46%. You make partial payments of $500 on October 15th and $1575 on November 17th, You want to make a final payment of the remaining outstanding balance on November 30tn. What is the size of your final payment? Use the declining balance method. A) $450.02 B) $399.76 C) $612.84 D) $851.11 E) $449