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Magong Community Bank has a R 9 0 0 million loan with Sedibelo Construction with a maturity of one year. The probability of default on

Magong Community Bank has a R

900

million loan with Sedibelo Construction with a

maturity of one year. The probability of default on the loan is

1.85 %

and the recovery

rate is assumed to be

25 % .

Calculate the expected loss for Magong Community Bank

loan to Sedibelo Construction?

(5)

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