Let’s revisit the example of the risk manager at a bank who has just approved a loan. The loan can end in one of three states: default, late, or repaid on time. We’re given that  and . a. Which rules...

Let’s revisit the example of the risk manager at a bank who has just approved a loan. The loan can end in one of three states: default, late, or repaid on time. We’re given that
 and
.

a. Which rules tell you how to find
(repaid on time)?
⁸

b. Is
(default
 late) = 0.17, or is it smaller?
⁹

c. What rule tells you how to determine the probability a loan does not default?
¹⁰