19-24 The use of the option pricing model to determine the actuarially fair premium for deposit insurance indicates that the cost of the insurance should rely on both the asset quality and level of leverage of the DI.

Question

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The option pricing model takes into account factors such as asset quality and leverage when calculating the actuarially fair premium for deposit insurance. Therefore, the cost of insurance should be influenced by these factors.

19-24 the Use of the Option Pricing Model to Determine