Question
ESI Loans uses the following rating scheme to classify the riskiness of its customers. Risk ClassRisk Premium (%) Prime.05High grade1.0Upper medium grade1.5Lower medium grade2.0Speculative: Non-investment
ESI Loans uses the following rating scheme to classify the riskiness of its customers.
Risk ClassRisk Premium (%)Prime.05High grade1.0Upper medium grade1.5Lower medium grade2.0Speculative: Non-investment grade4.0Speculative: Highly6.0Substantial risks9.0Extremely speculative12.0
The bank's pure rate of interest is 2% and the inflation premium is 3.5%.
The bank offers an annual rate of 6.63% to a customer. What is the risk class of this customer?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Management For Public Health And Not For Profit Organizations
Authors: Steven A. Finkler
2nd Edition
0131471988, 978-0131471986
