A bank has made a loan charging a base lending rate of 10%. It expects a probability of default of 5%. | Cheap Nursing Papers
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A bank has made a loan charging a base lending rate of 10%. It expects a probability of default of 5%.

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. A bank has made a loan charging a base lending rate of 10%. It expects a probability of default of 5%. If the loan is defaulted, it expects to recover 50% of its money through the sale of its collateral. What is the expected return on this loan?

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