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The Return (R_i) on a Loan Can Be Measured as Follows

Question 25

Question 25

Multiple Choice

The return (R_i) on a loan can be measured as follows:

A) AIS_i - E(L_i) , whereby E(L_i) = (EDF_i $\times$ LGD_i)
B) AIS_i - E(L_i) , whereby E(L_i) = (EDF_i / LGD_i)
C) AIS_i + E(L_i) , whereby E(L_i) = (EDF_i $\times$ LGD_i)
D) AIS_i + E(L_i) , whereby E(L_i) = (EDF_i / LGD_i)

Correct Answer:

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