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MADUBUCA76 MADUBUCA76
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6 years ago
A customer has approached a local credit union for a 20,000 1-year loan at a 10 interest rate. If the credit union does not approve the loan application, the 20,000 will be invested in bonds that earn a 6 annual return. Without additional information, the credit union believes that there is a 5 chance that this customer will default on the loan, assuming that the loan is approved. If the customer defaults on the loan, the credit union will lose the 20,000.
  The bank can thoroughly investigate the customers credit record and obtain a favorable or unfavorable recommendation. If the credit report is perfectly reliable, what is the most the credit union should be willing to pay for the report?
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Alphabet!Alphabet!
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