Question
The bank uses the following rating scheme to classify the riskiness of its customers Risk Class Risk Premium Prime .05% High grade 1.0% Upper medium
The bank uses the following rating scheme to classify the riskiness of its customers
Risk Class Risk Premium
Prime .05%
High grade 1.0%
Upper medium grade 1.5%
Lower medium grade 2.0%
Speculative: non investment grade 4.0%
Speculative: highly 6.0%
Substantial risks 9.0%
Extremely speculative 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 15.07% to a customer. What is the risk class of this customer?
A.Upper medium grade
B.Substantial risks
C.Speculative: Non-investment grade
D.Lower medium grade
E.Speculative: Highly
F.High grade
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Microsoft Excel Data Analysis And Business Modeling
Authors: Wayne Winston
7th Edition
0137613660, 9780137613663
