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QUESTION 14 A bank wishes to earn a pure rate of 3 percent, and the inflation premium is 4 percent. The bank uses the Fair

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QUESTION 14 A bank wishes to earn a pure rate of 3 percent, and the inflation premium is 4 percent. The bank uses the Fair Issac Corporation (FICO) score to determine car loan rate for its customers. Based on an automobile loan applicant's FICO score, it uses the following risk premium adjustment to the rate it quotes. FICO Score Risk Premium % >740 720-739 700-719 680-699 660-679 640-659 620-639

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