Find the expected loss or a borrower who has a default probability of 3% and a...

Question

Question

Find the expected loss or a borrower who has a default probability of 3% and a loss given default of 50%?

Answer 1

Answer #1

Answer: 1.50%

Calculations:

Expected loss rate = Default probability rate x Default loss rate

Expected loss rate = 0.03 x 0.50

Expected loss rate = 0.015 (or )

Expected loss rate = 1.5%

Answer 2

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