2. Monash Bank is considering selling 3 years loan of $100 million 8% interest with recourse to a buyer using an 8.5% discount rate. The buyer is negotiating with the bank to buy the loan without recourse with a 9.5% discount rate. If you know that the loan is expected to have a 0.50 % default, the bank should sell the loan with:

a.Without recourse

b.Buy insurance for the loan defaulting and sell without recourse

c.There is no enough information to decide

d. With recourse