QUESTION 12 Use the information in the table to determine the weighted average risk score for a borrower with the following characteristics: Debt to asset ratio = .50 Capital debt repayment capacity = .75 Return on assets = 3% Current ratio = 1.10 Operating ratio = .80 Loan to value ratio = .70 Risk Class Solvency (D/A Ratio) Repayment (CDRC) Profitability (ROA) Liquidity (CR) Financial Efficiency (Op. Ratio) Collateral (LTV) 1 Below 20% Above 1.25 Above 8% Above 1.25 Below 0.65 Below 0.60 2 21 40% 1.00 1.25 4 8% 1.00 1.25 0.65 0.75 0.60 0.70 3 Above 40% Below 1.00 Below 4% Below 1.00 Above 0.75 Above 0.70 Borrower Summary Score Criteria Weight Solvency (D/A) 20% Repayment (CDRC) 20% Profitability (ROA) 15% Liquidity (CR) 15% Financial Efficiency (Op. Ratio) 10% Collateral (LTV) 20% Overall Risk Class 1 to 1.50 1 1.51 to 2.25 2 Above 2.25 3 Interest Rate Class 1 6% Class 2 7% Class 3 8% a. 3.00 b. 2.45 c. 2.65 d. 2.75