Question: Exercise #3 - Calculating ROA with Default Risk A bank has a 16.23% ROA (k, so 1+k is the promised return) on a loan. What

Exercise #3 - Calculating ROA with Default Risk A bank has a 16.23% ROA (k, so 1+k is the promised return) on a loan. What is the expected return if the probability of default is 5%? E(r) = p(1 + k) - 1

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