Explain the importance of credit risk pricing

Reference no: EM13924814

1. Explain the importance of credit risk pricing. What are the various factors influencing credit risk pricing?

2. Explain how the credit risk pricing factors in different underlying PDs.

3. ABCD Bank enjoys an interest margin (net spread) of 2%. It suffers a credit loss of $100m. Calculate the amount of additional credit assets to be created to recoup the loss.

Reference no: EM13924814

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