CHAPTER 15
Loan Pricing II, Loan Loss Provisions on Performing Loans, and Estimates of Probabilities of Default
This chapter focuses on two related issues: loan pricing and determining loan loss provisions for performing loans. This is followed by the presentation of four methods for estimating probabilities of default. As will be shown, similar methodologies and data sets provide guidance for both pricing loans at origination and determining loan loss provisions for performing loans.
LOAN PRICING AT ORIGINATION DATE
An introduction to loan pricing was given in Chapter 12. It showed that financing loans with equity would require a profit and an ...
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