Question

Capitel U s ! A decrease ito B) decrease $50, incread, 870 b) inureds 350 n investor is purchasing loans in a Secondary market and there are high Quality and low quality loan types. the investor valve s high quality at $550 and low quality at $495. If the fraction high luality ualitis hpe hlbes is 0.75 investor cannot ! escrue type and then maximum bonos D) 4.5 A) Soo.s B) sos. 25

Answer 1

The maximum payment is computed as shown below:

= $ 550 x 0.75 + $ 495 ( 1 - 0.75 )

= $ 536.25

so the correct answer is option c i.e. $ 536.25

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