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Question 5 1 pts A bank issues a $400 loan to two types of borrower, type A & B. Type A repays with probability 0.94

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Question 5 1 pts A bank issues a $400 loan to two types of borrower, type A & B. Type A repays with probability 0.94 while B repays with prob. 0.74. If the bank cannot observe type, but believes that a borrower is type A with probability 0.8, then what is the competitive pooling interest rate? 8.5% O11.2 % O14.5% 16.4%

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