Dual risk rating

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Dual Risk Rating: Considerer three farmers (A, B, and C) whose probabilities of default have been estimated to be 0.5%, 2.5%, and 5%, respectively. They are each considering three separate loans (nine loan combinations total) each with an associated loan-given-default (LGD) likelihood: $100,000 with a LGD of 25%; 75,000 with a LGD of 35%; 60,000 with a LGD of 50%. For each combination of farm and loan, calculate the expected loss (EL) rate and the expected loss (EL) amount.

Reference no: EM132029040

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