A loan is to be repaid with semi-annual payments of $500 for 5 years (first payment 6 months from now).There is a 5% chance of default for any payment and if a payment is defaulted,no further payments will be made.The rate of interest on the loan is j₂ = 9%.Assuming the lender took into account the default rates,how much money was lent out?

Question

Quizplus · Accepted Answer

The Answer of A loan is to be repaid with semi-annual payments of $500 for 5 years (first payment 6 months from now).There is a 5% chance of default for any payment and if a payment is defaulted,no further payments will be made.The rate of interest on the loan is j₂ = 9%.Assuming the lender took into account the default rates,how much money was lent out?

A Loan Is to Be Repaid with Semi-Annual Payments of $500