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NEW QUESTION: 1
There are two bonds in a portfolio, each with a market value of $50m. The probability of default of the two bonds are 0.03 and 0.08 respectively, over a one year horizon. If the default correlation is 25%, what is the one year expected loss on this portfolio?
A. $1.38m
B. $5.5mc
C. $5.26m
D. $11m
Answer: B
Explanation:
Explanation
We will need to calculate the joint probability distribution of the portfolio as follows.Probability of the joint default of both A and B =

The marginal probabilities (ie the standalone probabilities of default of the two bonds) are known, and if we can calculate the probability of joint defaults of the two bonds, we can calculate the rest of the entries. We then multiply the probabilities with the expected loss under each scenario and add them up to get the total expected loss.
The calculations are shown below. The expected loss is $5.5m, and therefore the correct answer is Choice 'd'.

NEW QUESTION: 2
Tax system
A tax system needs to be updated due to new legislation. For a person with a salary of less than € 20.000 and who is married, the tax needs to be re-calculated. If the person also has more than two and less than five children, an additional 10% reduction is applicable.
How many cases are required to test the "Tax system" specification using a decision table which is not collapsed?
A. 0
B. 1
C. 2
D. 3
Answer: A

NEW QUESTION: 3
What is a challenge to consumers in adopting a public cloud?
A. High CAPEX
B. Delayed resource scaling
C. Vendor lock-in
D. Management overhead
Answer: C

NEW QUESTION: 4
Which of the following can you use as sources for the vocabulary in a decision table?
A. Procedures
B. Physical tables
C. Calculation views
D. Table types
E. OData models
Answer: B,C,D