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13. Suppose that an FI holds two loans with the following characteristics. Annual Spread between Loan Rate and Fl's Cost of Funds Loss to FI

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13. Suppose that an FI holds two loans with the following characteristics. Annual Spread between Loan Rate and Fl's Cost of Funds Loss to FI Given Default Expected Default Frequency Loan Annual Fees 1 2 0.45 0.55 5.5% 3.5 2.25% 1.75 30% 20 3.5% 1.0 Piz= -0.15 ALS 13. Suppose that an FI holds two loans with the following characteristics. Annual Spread between Loan Rate and Fl's Cost of Funds Loss to FI Given Default Expected Default Frequency Loan Annual Fees 1 2 0.45 0.55 5.5% 3.5 2.25% 1.75 30% 20 3.5% 1.0 Piz= -0.15 ALS

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