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Use the following information to answer the problem(s) below.
Consider two banks.Bank A has 1000 loans outstanding each for $100,000,that it expects to be fully repaid today.Each of Bank A's loans have a 6% probability of default,in which case the bank will receive $0 for each of the defaulting loans.Bank B has 100 loans of $1 million outstanding,which it also expects to be fully repaid today.Each of Bank B's loans have a 5% probability of default,in which case the bank will receive $0 for each of the defaulting loans.The chance of default is independent across all the loans.
-The standard deviation of the overall payoff to Bank B is closest to:
Water Molecules
The smallest unit of water (H2O), consisting of two hydrogen atoms covalently bonded to one oxygen atom, essential for most forms of life on Earth.
Hydrogen Bonding
A weak bond between two molecules resulting from an electrostatic attraction between a proton in one molecule and an electronegative atom in the other.
Ice
Water frozen into a solid state, typically at or below 0°C (32°F).
Water Boils
The transformation of water from liquid to gas phase, occurring at 100°C (212°F) at sea level.
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