12-29 Any Model That Seeks to Estimate an Efficient Frontier

question 48

Multiple Choice

12-29 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 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 above.

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Definitions:

Critical Distance

The ability to analyze and assess a subject or situation objectively without bias.

Functional Autonomy

The concept that behaviors can become detached from their original motives and gain new ones; often discussed in psychology and behaviorism.

Verstehen

A method in sociology for understanding social behavior by putting oneself in the place of others.

Social Behavior

Actions and interactions among individuals within a society, shaped by social norms, cultures, and structures.