Question: In models that are based on loan loss ratios, a beta that is found to be more than one for a particular loan sector indicates

In models that are based on loan loss ratios, a beta that is found to be more than one for a particular loan sector indicates that

a.

the loans in that sector will soon be downgraded.

b.

the FI should increase its concentration limits in that loan sector due to the high rates of return.

c.

the loan losses in that sector are systematically lower relative to total loan losses.

d.

the FI should decrease its concentration limits to that sector since it is more systematic.

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