Chapter 20 Building Risk-Adjusted Pricing Models
- Loan Pricing Models 492
- Stochastic Net Borrowed Funds Pricing Model 494
- Output Screen and Yield Calculation 500
- Moving From Deterministic Pricing to a Stochastic Pricing Solution 502
- Loan Pricing Lessons 505
A bank acquires funds through deposits, borrowing, and equity, recognizing the cost of each source and the resulting average cost of funds to the total bank. The funds are allocated to assets, ...