You Are Assessing a Credit Portfolio with 100 Issuers Where

question 5

Multiple Choice

You are assessing a credit portfolio with 100 issuers where the hazard rate of default of each name is 0.05. The default correlation of all firms (pairwise) is zero. What is the average time it will take for 10% of the portfolio to default?

• A) 1/5 year
• B) 1/2 year
• C) 1 year
• D) 2 years

---

Definitions:

Collective Intelligence

The shared or group intelligence that emerges from the collaboration or collective efforts of many individuals working together.

Crowdsourcing

The process of obtaining ideas, content, or services by soliciting contributions from a large group of people, especially an online community.

Network Effect

The phenomenon by which a product or service gains additional value as more people use it, thus encouraging further adoption and usage.

Collectively Intelligent

Describes a group or system that demonstrates a high level of intelligence and problem-solving ability through the aggregation of individual members' knowledge and skills.