Question: Please solve Consider two local banks. Bank A has 89 loans outstanding, each for $1.0 million, that it expects will be repaid today. Each loan

Please solve Consider two local banks. Bank A has 89 loans outstanding, Please solve

Consider two local banks. Bank A has 89 loans outstanding, each for $1.0 million, that it expects will be repaid today. Each loan has a 4% 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 $89 million outstanding, which it also expects will be repaid today. It also has a 4% probability of not being repaid. Calculate the following: a. The expected overall payoff of each bank. b. The standard deviation of the overall payoff of each bank

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