# Loans Assignment | Professional Writing

Consider two local banks. Bank A has 98 loans outstanding, each for \$1.0 million, that it expects will be repaid today. Each loan has a 3% probability of default, in which case the bank is not repaid anything. The chance of default is independent across all the loans. Bank Bhas only one loan of \$98 million outstanding, which it also expects will be repaid today It also has a 3% probability of not being repaid. Calculate the following: a. The expected overall payoff of each bank b. The standard deviation of the overall payoff of each bank a. The expected overall payoff of each bank The expected overall payoff of Bank Ais million (Round to the nearest integer) The expected overall payoff of Bank Bis 5 million (Round to the nearest integer)

Enter your answer in each of the answer boxes Consider two local banks. Bank A has 98 loans outstanding, each for \$1.million, that it expects will be repaid today. Each loan has a 3% probability of default in which case the bank is not repaid anything. The chance of default is independent across all the loans Bank Bhas only one loan of \$98 million outstanding, which it also expects will be repaid today It also has a 3% probability of not being repaid Calculate the following: a. The expected overall payoff of each bank b. The standard deviation of the overall payoff of each bank. b. The standard deviation of the overall payoff of each bank The standard deviation of the overall payoff of Bank As (Round to two decimal places) The standard deviation of the overall payoff of Bank Bis (Round to two decimal places Enter your answer in each of the answer boxes

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