Any Model That Seeks to Estimate an Efficient Frontier for Loans

question 52

Multiple Choice

Any model that seeks to estimate an efficient frontier for loans, and thus the optimal proportions in which to hold loans made to different borrowers, needs to determine and measure the

• A)expected return on each loan to a borrower.
• B)risk of each loan made to a borrower.
• C)correlation of default risks between loans made to borrowers.
• D)expected return of the entire loan portfolio
• E)All of the options.

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Definitions:

Operant Conditioning

An approach to teaching that relies on using incentives and penalties for actions, focusing on how outcomes affect actions.

Classical Conditioning

Learning by the method of associating an environmental stimulus with one that happens naturally.

Shaping

A method of teaching new behaviors through the use of reinforcement of successive approximations toward a desired behavior.

Worker Productivity

The amount of work or output produced by an employee within a certain period of time.