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Consider two local banks. Bank A has 8 0 loans outstanding, each for $ 1 . 0 million, that it expects will be repaid today.
Consider two local banks. Bank A has loans outstanding, each for $ million, that it expects will be repaid today. Each loan has a
probability of default, in which case the bank is not repaid anything. The chance of default is independent across all the loans. Bank B has
only one loan of $ million outstanding, which it also expects will be repaid today. It also has a probability of not being repaid.
Calculate the following:
a The expected overall payoff of each bank.
b The standard deviation of the overall payoff of each bank.
a The expected overall payoff of each bank.
The expected overall payoff of BankA is $ million. Round to the nearest integer.
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