tion 9 et ered The bank has a rule that they will not give out a loan to someone who has a simulated probability of default greater than 10%. If the borrower's income drops from $80,000 to $75,000 would the bank still extend them a loan? ed out of Select one: No. ag tion Yes. tion 10 et ered The model allows us to change a number of the assumptions (shown in grey) and see the resulting impact on the default rate. Consider the following assumptions: Mortgage Amount = $500,000 Interest Rate = 5.0% ed out of eg tion Net Work Income (Year 1) = $80,000 Net Work Income Growth = 3.0% Net Unemployed Income (Year 1) = $15,000 Net Unemployed Income Growth = 3.0% Living Expenses (Year 1) = $25,000 Living Expenses Growth = 3.0% Probability of Unemployment = 0.05 Savings (Year 0) = $0 Consider which of the following statements are true: (A1) If we use the assumptions above except "Mortgage Amount = $300,000" then the default rate is 3%. (A2) If we use the assumptions above except "Mortgage Amount = $300,000" then the default rate is 5%. (B1) If we use the assumptions above except "Interest Rate = 6%" then the default rate is 10%. (B2) If we use the assumptions above except "Interest Rate = 6%" then the default rate is 12%. (C1) If we use the assumptions above except "Net Unemployed Income (Year 1) = $10,000" then the default rate is 15%. (C2) If we use the assumptions above except "Net Unemployed Income (Year 1) = $10,000" then the default rate is 11%. (D1) If we use the assumptions above except "Probability of Unemployment = 0.1" then the default rate is 20%. (D2) If we use the assumptions above except "Probability of Unemployment = 0.1" then the default rate is 25%