Use the Following Information to Answer the Problem(s)below

question 100

Multiple Choice

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 A is closest to:

• A)$689,000.
• B)$751,000.
• C)$2,179,000.
• D)$2,375,000.

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Definitions:

Consumer Incomes

The financial resources available to consumers, influencing their ability to purchase goods and services.

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A type of salsa made with chipotle peppers and corn, often served as a condiment or side dish.

Macroeconomic Environmental Factor

External influences that affect the overall economy and economic conditions, impacting businesses and consumers alike, such as inflation, interest rates, and economic growth.

Price Elasticity

A measure of how the quantity demanded of a good or service changes in response to a change in its price.