Distinguish between the two types

Assignment Help Business Economics
Reference no: EM132559011

Suppose a bank is faced with two types of borrowers - a high risk borrower that should be charged an interest rate of 9% and a low risk borrower that should be charged an interest rate of 4%. There is a 30% chance of getting a high risk borrower and a 70% chance of getting a low risk one. What is the expected interest rate that will be charged by a bank that cannot exactly distinguish between the two types but knows the probabilities of each type. In this market for loans what would be the result.

Reference no: EM132559011

Questions Cloud

What commission c should : Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker.
Server virtualization : Explain Windows Azure capabilities for virtual machines and managing hybrid cloud, including Windows Azure's Internet as Service (IaaS) and storage capabilities
Prepare the cash budget with supporting schedules : Prepare the Cash Budget with supporting schedules for cash collections and cash disbursements for the FIRST QUARTER ONLY.
How much is the taxable income : Jacob was an OFW employed by I-Tech Corporation in the USA. Jacob retired. How much is the taxable income
Distinguish between the two types : Suppose a bank is faced with two types of borrowers - a high risk borrower that should be charged an interest rate
Find the chi-square critical value for goodness : Find the Chi-Square critical value for goodness of fit where alpha is the level of significance and k is the number of possible outcomes for each trial.
What is the cost of the units in ending inventory : On January 10th, the company sells 4,000 units. Using the Weighted Average method of inventory costing, what is the cost of the units in Ending Inventory
What would be your expected profits per unit : a) If you decided to price high, what would be your expected profits per unit.
Which the costs will be assigned using the abc system : Which The costs will be assigned using the ABC system? MobileCash Corporation operates a fleet of armoured cars that make scheduled

Reviews

Write a Review

Business Economics Questions & Answers

  Pay for expedited handling

If you are willing to pay for expedited handling, you can be paid in one month. Would you be willing to pay $50? $100? $200? More?

  Implementing a new information system

What experiences can you gain working in a collaborative team environment, developing and implementing a new information system?

  Elucidate the differences among a currency board

Elucidate the differences among a currency board, a fixed exchange rate system and a pegged exchange rate.

  Cash operating expenses-depreciation expense

Company AXR had sales revenues of S94 million last year. Cash operating expenses were $42 million The depreciation expense was $6 million. The tax rate is 40%. No dividends were paid the stock for company AXR is currently selling for $20 per share an..

  What is the beta of the portfolio

The amount invested in Coke is $20,000 and in Wal-Mart is $30,000. What is the beta of the portfolio?

  Small open economy with perfect capital mobility

The government of a small open economy with perfect capital mobility wants to establish a "stronger" currency by moving its exchange rate higher. What are the consequences of these adjustments on domestic output and net exports?

  Discuss one event during each of the administrations

Assess the effectiveness of the federal government during the Eisenhower, Kennedy, and Johnson administrations in enforcing desegregation laws throughout the South. Discuss one event during each of the administrations.

  Explain why china has been so successful so far

Describe state capitalism in China and explain what policies China uses for its economy. Explain why China has been so successful so far. Explain what the potential challenges for continued success in China might be.

  How much is izaak willing pay for a license

Izaak likes to eat pizza and to fish. The more fishing he does the happier he is, up to 8 hours a day. If he fishes longer than 8 hours he gets a sore back and is less happy than if he hadn’t fished at all. For y less than or equal to 8, his utility ..

  Illustrate what is the marginal product each black worker

Illustrate what is the (true) value of the marginal product of each black worker. Discuss the employment decision made by firms for which d = 0.2 and d = 0.8 respectively.

  What is a standardized budget deficit-surplus

What is a standardized budget deficit/surplus? How is it different from actual budget deficit/surplus? How is budget deficit/surplus related to public debt? What is the approximate percentage of US public debt that is owned by foreigners? What is the..

  Describe how some of these things mean that gdp over

Describe how some of these things mean that GDP over- or under-states your quality of life. Would there be value in a measure of output that captured those thin

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd