=+12. UNIVERSAL SAVINGS & LOAN has $1000 to lend. Risk-free loans will be paid back in full

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=+12. UNIVERSAL SAVINGS & LOAN has $1000 to lend.

Risk-free loans will be paid back in full next year with 4% interest. Risky loans have a 20% chance of defaulting (paying back nothing) and an 80% chance of paying back in full with 30% interest.

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