#2A. A borrower has these characteristics: D/A = 0.5; CDRC = 0.75; ROA = 3%; Current Ratio = 1.1; Operating Ratio = 0.8; LTV = 0.7. Using Table 5.1 (on Textbook page 90), determine the weighted average risk score for a borrower by completing the following table. (13 points) Rating Class Weighted Score Weighted Average Risk Score Calculation: Criteria Weight Solvency (D/A) 0.2 Repayment (CDRC 0.2 Profitability (ROA) 0.15 Liquidity (Current Ratio) 0.15 Financial Efficiency (Operating Ratio) 0.1 Collateral (LTV) 0.2 Weighted Average Risk Score Information needed to answer #2B (ii) and (iii) Risk class is 1 if weighted average risk score is 2 1 but 2.25 If risk class is 1, the borrower will be charged 6% of interest rate. If risk class is 2, the borrower will be charged 7% of interest rate. If risk class is 3, the borrower will be charged 8% of interest rate