A finance company discovers that 4% of their loan customers will default in their loan (theydo not pay back the loan) and the remaining loan customers do not default in their loan. Inaddition, 25% of those that default and 1% of those that do not default are unemployed.Let D be the event that a randomly chosen loan customer will default on their loan andU be the event that a randomly chosen loan customer is unemployed.Write down the value P(D) and hence find P(D^c).

Let’s say that you are the Business Analytics Head at a national bank. From the historical data, you have determined that there is a 0.33 probability that a customer would default on a particular loan. What is the probability that out of the next two customers who apply for the same loan, both would not default on the loan?0.110.890.450.29

A bank has made two loans, A & B, charging a base lending rate of 10 per cent. It expects a probability of default of 5 per cent for both loans. If the proportion of the principal and interest that is collectible on default is higher for loan A, which of the following statements is true: (0.5 marks)Question 6Answera.Loan A has a higher risk.b.Loan B has a higher risk.c.Loans A and B have the same level of risk.d.None of the above is correct.

Let F be the event that a student is enrolled in a finance course, and let S be the event that a student is enrolled in a statistics course It is known that 40\% of all students are enrolled in an finance course and 35\% of all students are enrolled in statistics Included in these numbers are 15\% who are enrolled in both statistics and finance.Find P(S)?Select one:a.0.15.b.0.35.c.0.40.d.0.55.e.0.60.

Assume that there are two factors influencing the past default behaviour of borrowers; these being the debt to equity ratio and the sales to assets ratio. Based on past default (repayment) experience, the linear probability model is estimated as Zi = 0.5(D/Ei) - 0.25 (S/Ai). Assume that a prospective borrower has a D/E ratio of 0.9 and a sales to assets ratio of 1.5. What is the borrower’s probability of default? (0.5 marks)

1 pointThe Probability of Default (PD) is a key component in credit risk analysis. Which of the following statements best defines the Probability of Default?a. It is a measure of the uncertainty in the financial markets.b. It represents the likelihood of a loan being approved by a lender.c. It quantifies the risk of a borrower defaulting on their credit obligations.d. It determines the maturity date of a financial instrument.29.63%