Question
A bank has made a loan charging a base lending rate of 15%. It expects a probability of default of 5%. If the loan is
A bank has made a loan charging a base lending rate of 15%. It expects a probability of default of 5%. If the loan is defaulted, the bank expects to recover 45% of its money through the sale of its collateral. What is the expected return on this loan?
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Public Finance
Authors: H L Bhatia
30th Edition
9390080258, 978-9390080250
