A regression of sectoral loan losses against total loans losses,both measured as a percentage of total loans,of a bank results in the following beta coefficients for the real estate (RE) and commercial (CL) loan variables: RE = 1.2, CL = 1.6.The intercept for both regressions is zero.
The results can be interpreted as
A) if the total loan losses of the bank measured as a percentage of total loans is 2 percent,the losses in the real estate sector,measured as a percentage of total loans,is 1.2 percent.
B) if the total loan losses of the bank measured as a percentage of total loans is 2 percent,the losses in the commercial sector,measured as a percentage of total loans,is 3.2 percent.
C) if the total loan losses of the bank measured as a percentage of total loans is 2 percent,the losses in the commercial sector,measured as a percentage of total loans,is 6.4 percent.
D) if the total loan losses of the bank measured as a percentage of total loans is 3 percent,the losses in the commercial sector,measured as a percentage of total loans,is 5.2 percent.
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