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What is the required risk premium on the loan

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Reference no: EM133012968

Question - The dear teacher could please step by step explanation to me how to become answer coming 1.64%.

Assume that B = $200 000, r = 1 year, i = 7%, d = 0.9, N(h1) = 0.174120 and N(h2) = 0.793323.

Using Moody's KMV Credit Monitor model, what is the required risk premium on the loan (round to two decimal places)?

A. 0.13%

B. 0.91%

C. 1.64%

D. 6.30%

Reference no: EM133012968

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