Question
express as a markov chain #2The bank offers loans which are either paid when due or are delayed. If the payment on a loan is
express as a markov chain
#2The bank offers loans which are either paid when due or are delayed. If the payment on a loan is delayed by more than 4 quarters (1 year), the bank considers the loan a bad debt and writes it off. The following table provides a sample of the banks past experience with loans.
Loan amount Quarters Late Payment history
10,000 0 $2000 paid, $3000 delayed by an extra quarter, $3000 delayed by 2 extra quarters, and the rest delayed by 3 extra quarters.
25,000 1 $4000 paid, $12,000 delayed by an extra quarter, $6000 delayed by 2 extra Quarters, and the rest delayed by 3 extra quarters.
50,000 2 $7500 paid, $15,000 delayed by an extra quarters, and the rest delayed by 2 extra quarters.
$50,000 3 $41,000 paid, and the rest delayed by an extra quarter.
$100,000 4 $50,000 paid
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