Question 10 (5 points) A bank limits loans to customers in the technology industry so...
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Question 10 (5 points) A bank limits loans to customers in the technology industry so that the maximum loss as a percent of capital will not exceed 20%. The limits assume that if a loan in the technology sector defaults, there will be an 80% loss of interest and principal. What is the concentration limit (maximum loan) for technology sector loans for this bank? Concentration Limit - (Maximum Loss as a Percent of Capital) x (1/Loss Rate) 20% 10% 33% 25%
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