12-18 Loan loss ratio models are based on historical loan loss ratios of specific sectors relative to the historic loan loss ratios of the entire loan population.

Question

Quizplus · Accepted Answer

This statement is true. Loan loss ratio models rely on historical loan loss ratios of specific sectors to determine the expected losses for new loans in that sector, compared to the historic loan loss ratios of the entire loan population. This approach allows lenders to better anticipate potential loan losses and adjust their risk management strategies accordingly.

12-18 Loan Loss Ratio Models Are Based on Historical Loan