A financial institution has a portfolio of 500 mortgages with an average value of $300,000 and a
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A financial institution has a portfolio of 500 mortgages with an average value of $300,000 and a standard deviation of $50,000. If the institution wants to limit its potential loss to no more than 2 standard deviations with 95% confidence, what is the minimum amount of money it should hold in reserve for potential losses? Assume that the distribution of mortgage values is normal.
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