Loan Rate Assignment | Homework For You
June 5th, 2020
QUESTION 19 Use the following information for the next two questions. Suppose the risk free rate is 4%. Consider the following three borrowers: A, B, and C. Their probability of repayment (p) is.95, .92, and .90, respectively, with associated gammas of.3, 4, and .6, respectively. Where gamma = % recovery in event of default. Which borrower would be charged the highest loan rate?
QUESTION 20 How much would A’s loan rate increase if the loan was unsecured? O 0% 0.8% 1.7% 5.5%. Get Finance homework help today