Assume that B = $200 000, r = 1 year, i = 7%, d = 0.9, N(h1)

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Assume that B = $200 000, r = 1 year, i = 7%, d = 0.9, N(h1) = 0.174120 and N(h2) = 0.793323. Using Moody's KMV Credit Monitor model, what is the required risk premium on the loan (round to two decimal places)?

A. 0.13%
B. 0.91%
C. 1.64%
D. 6.30%

Related Book For answer-question

Fundamentals of Financial Management

ISBN: 9780273713630

13th Revised edition

Authors: James van Horne, John Wachowicz

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Posted Date: Jun 15, 2021 10:46 AM

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Assume that B = $200 000, r = 1 year, i = 7%, d = 0.9, N(h1)

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Answer Option C is correct 164 The equity risk premium is the prem... View the full answer

Fundamentals of Financial Management

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