If the Amount Lost Per Dollar on a Defaulted Loan

Multiple Choice

If the amount lost per dollar on a defaulted loan is 40 percent, then a bank that does not permit the loss of a loan to exceed 10 percent of its bank capital should set its concentration limit (as a percentage of capital) to

A) 5 percent.
B) 15 percent.
C) 25 percent.
D) 30 percent.
E) 50 percent.