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financial math please provide detailed explanation A lender requires a continuously compounded yield of 8% for a 5-year loan of $25,000. There is a 10%
financial math
A lender requires a continuously compounded yield of 8% for a 5-year loan of $25,000. There is a 10% chance of default. In the event of default the lender will be able to recover 50% of the amount owed. (i) What continuously compounded rate must the lender charge in order to have an expected continuously compounded rate of 8%? (ii) What continuously compounded rate must the lender charge in order to have the expected continuously compounded rate of 8% if there is no default protection please provide detailed explanation
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