Information concerning the allocation of loan portfolios to different market sectors is given below. Allocation of Loan Portfolios in Different Sectors (%) Sectors Commercial Consumer Real Estate National 30% 40 30 Bank A 50% 30 20 Bank B 10% 40 50 Bank A and Bank B would like to estimate how much their portfolios deviate from the national average.

a. Which bank is further away from the national average?

b. Is a large standard deviation necessarily bad for an FI using this model?

LO.1