Exhibit 9-2 a Customer Has Approached a Local Credit Union for a for a $20,000

question 27

Essay

Exhibit 9-2
A customer has approached a local credit union for a $20,000 1-year loan at a 10% interest rate. If the credit union does not approve the loan application, the $20,000 will be invested in bonds that earn a 6% annual return. Without additional information, the credit union believes that there is a 5% chance that this customer will default on the loan, assuming that the loan is approved. If the customer defaults on the loan, the credit union will lose the $20,000.
-Refer to Exhibit 9-2.The bank can thoroughly investigate the customer's credit record and obtain a favorable or unfavorable recommendation.If the credit report is perfectly reliable,what is the most the credit union should be willing to pay for the report

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Definitions:

Body Mass Index

A numerical value derived from a person's weight and height, used to indicate if a person is underweight, normal weight, overweight, or obese.

Diagnosed With Depression

The medical identification of depression, a mental health disorder characterized by persistent feelings of sadness, loss, or anger.

Retirement Pension

is a financial arrangement providing individuals with an income when they have concluded their working or professional careers.

Retirement Age

The age at which an individual is eligible to leave their active work life and begin receiving retirement benefits.