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:

Biological Clock

An internal mechanism in organisms that regulates biological rhythms and cycles, such as sleep-wake cycles, often in response to environmental cues.

Hypothalamus

A region of the brain responsible for producing hormones that regulate essential bodily functions, including temperature, hunger, and sleep.

Thalamus

The thalamus is a structure within the brain that serves as a relay station, processing and transmitting information from the senses to the appropriate areas of the brain.

Amygdala

An almond-shaped part of the brain involved in processing emotions, fear responses, and memory of emotional events.