Question: Comeplete just B ! Round 4 decimal places. Consider two local banks. Bank A has 1 2 0 loans outstanding, each for $ 0 .

Comeplete just B

!

Round

4

decimal places. Consider two local banks. Bank A has

120

loans outstanding, each for $

0.7

million, that it expects will be repaid today. Each loan has a

6 %

probability of default, in which case the bank is not repaid anything. The chance of default is independent across all the loans. Bank B has only one loan of $

84

million outstanding, which it also expects will be repaid today. Itfalso has a

6 %

probability of not being repaid. Calculate the following:

.

The expected overall payoff of each bank.

.

The standard deviation of the overall payoff of each bank.

Comeplete just B! Round 4 decimal places. Consider two local banks.

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