You expect to collect a risky cash flow (meaning is a probability of default) in 5 years'

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You expect to collect a risky cash flow (meaning is a probability of default) in 5 years' time. The 5- year risk free spot rate is 3.125% and risk spread is 1.75%. What is the present value of the expected loss? Please show your work.

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Microeconomics

ISBN: 978-1259163531

1st edition

Authors: Dean Karlan, Jonathan Morduch

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Posted Date: May 08, 2023 07:43 AM

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You expect to collect a risky cash flow (meaning is a probability of default) in 5 years'

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To calculate the present value of the expected loss we need to discount the expected loss back to pr... View the full answer

Microeconomics

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