Using regression analysis on historical loan losses, a bank has estimated the following: XC = 0.002 +

Question:

Using regression analysis on historical loan losses, a bank has estimated the following:

XC = 0.002 + 0.8 XL, and XH = 0.003 + 1.8 XLwhere XC = loss rate in the commercial sector, XH = loss rate in the household sector, and XL = loss rate for its entire loan portfolio.

a) If the bank’s total loan loss rates increase by 10%, what are the expected loss rate increases in the commercial and consumer sectors?

b) In which sector should the bank limit its loans and why?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Answer rating: 100% (1 review)

Answered By

Somshukla Chakraborty

I have a teaching experience of more than 4 years by now in diverse subjects like History,Geography,Political Science,Sociology,Business Enterprise,Economics,Environmental Management etc.I teach students from classes 9-12 and undergraduate students.I boards I handle are IB,IGCSE, state boards,ICSE, CBSE.I am passionate about teaching.Full satisfaction of the students is my main goal. I have completed my graduation and master's in history from Jadavpur University Kolkata,India in 2012 and I have completed my B.Ed from the same University in 2013. I have taught in a reputed school of Kolkata (subjects-History,Geography,Civics,Political Science) from 2014-2016.I worked as a guest lecturer of history in a college of Kolkata for 2 years teaching students of 1st ,2nd and 3rd year. I taught Ancient and Modern Indian history there.I have taught in another school in Mohali,Punjab teaching students from classes 9-12.Presently I am working as an online tutor with concept tutors,Bangalore,India(Carve Niche Pvt.Ltd.) for the last 1year and also have been appointed as an online history tutor by Course Hero(California,U.S) and Vidyalai.com(Chennai,India).

4.00+ 2+ Reviews 10+ Question Solved

Related Book For book-img-for-question