Question: Question content area top Part 1 Consider two local banks. Bank A has loans outstanding, each for $1.0 million, that it expects will be repaid

Question content area top Part 1 Consider two local banks. Bank A has loans outstanding, each for $1.0 million, that it expects will be repaid today. Each loan has a 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 million outstanding, which it also expects will be repaid today. It also has a 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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