Question: Use the information in the table to find the expected loss amount for a borrower in risk class 11, assuming that loss-given- default is

Use the information in the table to find the expected loss amount

Use the information in the table to find the expected loss amount for a borrower in risk class 11, assuming that loss-given- default is in class 4. The loan amount is $250,000. Expected Loss Rate LGD Risk Class PD LGD LGD LGD LGD Class 1 Class 2 Class 3 Class 4 Class 5 (0%) (25%) (50%) (75%) (100%) 1 0.00 0.00 0.00 0.00 0.00 0.00 2 0.00 0.00 0.00 0.00 0.00 0.00 3 0.00 0.00 0.00 0.00 0.00 0.00 4 0.03 0.00 0.01 0.02 0.02 0.03 5 0.04 0.00 0.01 0.02 0.03 0.04 6 0.24 0.00 0.06 0.12 0.18 0.24 7 0.46 0.00 0.12 0.23 0.37 0.46 8 0.67 0.00 0.17 0.34 0.50 0.67 9 0.90 0.00 0.22 0.45 0.67 0.90 10 2.16 0.00 0.54 1.08 1.62 2.16 11 3.20 0.00 0.80 1.60 2.40 3.20 12 7.76 0.00 1.94 3.88 5.82 7.76 13 12.28 0.00 3.07 6.14 9.21 12.28 14 27.17 0.00 6.79 13.58 20.38 27.17 a. 2.4% Ob.3.2% Oc. $8,000 d. $6,000

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