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The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers Risk Premium (%) 1.05 1.0 1.5 Risk Class
The Bank of Fast Loans uses the following rating scheme to classify the riskiness of its customers Risk Premium (%) 1.05 1.0 1.5 Risk Class Prime High grade Upper medium grade Lower medium grade Speculative: Non-investment grade Speculative: Highly | Substantial risks Extremely speculative 2.0 4.0 6.0 | 9.0 12.0 The bank's pure rate of interest is 2% and the inflation premium is 3.5%. The bank offers an annual rate of 9.79% to a customer. What is the risk class of this customer? A. Upper medium grade B. Substantial risks C.Speculative: Highly D.Lower medium grade E High grade F. Speculative: Non-investment grade
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