Question
The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers. Risk Class Prime.05High grade1.0 Upper medium grade1.5 Lower
The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers.
Risk Class
Prime.05High grade1.0
Upper medium grade1.5
Lower medium grade2.0
Speculative: Non-investment grade4.0
Speculative: Highly6.0
Substantial risks9.0
Extremely speculative12.0
The bank's pure rate of interest is 2% and the inflation premium is 3.5%.
The bank offers an annual rate of 7.15% to a customer. What is the risk class of this customer?
A.Substantial risks
B.Lower medium grade
C.Upper medium grade
D.Speculative: Highly
E.High grade
F.Speculative: Non-investment grade
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Introduction To Management Science and Business Analytics A Modeling And Case Studies Approach With Spreadsheets
Authors: Frederick S. Hillier, Mark S. Hillier
7th Edition
1260716295, 9781260716290
