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.

---

Definitions:

Monument

A structure erected to commemorate a famous or important person or event, often significant in historical or cultural contexts.

Michelangelo

Renowned Italian sculptor, painter, architect, and poet of the High Renaissance, famous for works like the Sistine Chapel ceiling and the statue of David.

Arcadian Theme

Represents idyllically pastoral landscapes and peaceful, harmonious settings in art, often idealizing rural life.

Idyllic Simplicity

A concept in art and literature that idealizes a peaceful and simple way of life, often in a pastoral setting, away from the complexities of civilization.