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H.U. Bank has a cost of funds of 9 percent. The borrower has a 7.94 percent chance of default, and if default occurs, the bank
H.U. Bank has a cost of funds of 9 percent. The borrower has a 7.94 percent chance of default, and if default occurs, the bank expects to recover 85 percent of the principal and interest. What is unexpected loss on the loan using the Moody's Analytics model-assuming defaults are binomially distributed? (Please enter your answer in percentage with 2 digits after the decimal point!)
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