If a Bank's Concentration Limit (As a Percent of Capital)

question 36

Multiple Choice

If a bank's concentration limit (as a percent of capital) is 20 percent, and its expected recovery from defaulted loans is 50 percent, what is the maximum loss it permits to affect its capital in the event of a default?

• A)5 percent.
• B)10 percent.
• C)15 percent.
• D)20 percent.
• E)25 percent.

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