A Bank Has Categorized Its Credit Card Accounts as High

question 19

Multiple Choice

A bank has categorized its credit card accounts as high risk or low risk. The overall default rate on all the bank's credit card accounts is .20. In the past, of the accounts that defaulted, 50 percent were correctly identified by the bank as high risk. What is the default risk for a high-risk credit card account?

• A) .50.
• B) .15.
• C).40.
• D).25.
• E) There is not enough information to determine the answer.

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Definitions:

Programmed Decisions

Decisions made using a rule, policy, or procedure for routine or repetitive problems that have been encountered before.

Customer Relations

The management and development of interaction between a business and its customers to improve satisfaction and loyalty.

Programmed Decisions

Decisions that are routine and repetitive, which can be addressed through established processes.

Company Policies

Established guidelines and rules that dictate how various aspects of business should be conducted within an organization.