Question A Commercial Bank made a loan to a Company. The promised return (k) on this loan

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A Commercial Bank made a loan to a Company. The promised return (k) on this loan as per the contract is 8%.

a) Calculate the expected return on a loan if the probability of default is 3%.

b) How will your answer change if probability of default is 0%?

c) Differentiate between promised return and expected return on a loan.

Posted Date: May 18, 2024 05:02 AM

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Question A Commercial Bank made a loan to a Company. The promised return (k) on this loan

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