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Question
Any model that seeks to estimate an efficient frontier for loans, and thus the optimal proportions in which to hold loans made to different borrowers, needs to determine and measure the
A. expected return on each loan to a borrower.
B. risk of each loan made to a borrower.
C. correlation of default risks between loans made to borrowers.
D. expected return of the entire loan portfolio
E. All of the above.
Answer
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