In the Moody's Analytics Portfolio Model, the Expected Loss on a Loan

question 42

Multiple Choice

In the Moody's Analytics portfolio model, the expected loss on a loan is

• A)the product of the estimated loss given default and risk-free rate on a security of equivalent maturity.
• B)annual all-in-spread minus the loss given default.
• C)annual all-in-spread minus the expected default frequency.
• D)the product of the expected default frequency and the estimated loss given default.
• E)the volatility of the loan's default rate around its expected value.

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Definitions:

Pain

An uncomfortable sensation and emotional experience linked to actual or potential tissue damage, varying greatly in intensity, quality, and duration.

Frontal Lobe

The part of the brain located at the front of each cerebral hemisphere, responsible for decision making, problem solving, control of purposeful behaviors, consciousness, and emotions.

Broca's Area

A region in the frontal lobe of the brain linked to speech production and language processing.

Wernicke's Area

A region of the brain important for language comprehension, located in the temporal lobe.