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

question 95

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 expected overall payoff to Bank A is:

• A)$5,000,000.
• B)$6,000,000.
• C)$94,000,000.
• D)$95,000,000.

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Definitions:

Déjà Vu

The eerie sensation that an experience currently being experienced has already been experienced in the past.

Mnemonic Device

A learning technique that aids information retention by associating complex information with simple, memorable constructs.

Mental Images

Visual representations in the mind of objects, scenes, or events not currently being visually perceived.

Implicit Memory

In this memory model, previous experiences help in carrying out tasks more efficiently, without the conscious awareness of the individual.