solve 17.7

Cyert and Associates (1963). Bank1 offers loans which are either paid when due or are delayed. If the payment on a loan is delayed by more than 4 quarters (1 year), Bank1 considers the loan a bad debt and writes it off. The following table provides a sample of Bank1's past experience with loans. Express Bank1's loan situation as a Markov chain. 7. Consider Problem 17-3. Suppose that Bank1 currently has $1,000,000 worth of outstanding loans. Of these, $300,000 have just been paid, $150,000 are one quarter late, $250,000 are two quarters late, $200,000 are three quarters late, and the rest are over four quarters late. What would the picture of these loans be like after two cycles of loans? Cyert and Associates (1963). Bank1 offers loans which are either paid when due or are delayed. If the payment on a loan is delayed by more than 4 quarters (1 year), Bank1 considers the loan a bad debt and writes it off. The following table provides a sample of Bank1's past experience with loans. Express Bank1's loan situation as a Markov chain. 7. Consider Problem 17-3. Suppose that Bank1 currently has $1,000,000 worth of outstanding loans. Of these, $300,000 have just been paid, $150,000 are one quarter late, $250,000 are two quarters late, $200,000 are three quarters late, and the rest are over four quarters late. What would the picture of these loans be like after two cycles of loans