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Standard deviation of the overall payoff of bank a

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Consider two local banks. Bank A has 92 loans? outstanding, each for? $1.0 million, that it expects will be repaid today. Each loan has a 5% probability of? default, in which case the bank is not repaid anything. The chance of default is independent across all the loans. Bank B has only one loan of $92 million? outstanding, which it also expects will be repaid today. It also has a 5% probability of not being repaid. Calculate the? following:

The standard deviation of the overall payoff of Bank A is?

Reference no: EM132395521

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