Consider, a U.S. financial institution acquires a new check clearing software for $2 million dollars. Is this institution exposed to technology risk in this case?

Yes or No

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Deanna HettingerLv2

29 Sep 2019

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2. A financial institution is planning to give a loan of $5 million to a firm. It expects to charge an up-front fee of 0.20%
and a service fee of 5 basis points. The loan has a maturity of 8 years. The cost of funds for the financial institution is 10%.
The FI has estimated a risk premium of 0.15%. The current market interest rates for this type of loan is 10.1%.
The 99th (extreme case) loss rate for borrowers of this type has historically run at 4%.
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Consider, a U.S. financial institution acquires a new check clearing software for $2 million dollars. Is this institution exposed to technology risk in this case? Yes or No

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Consider, a U.S. financial institution acquires a new check clearing software for $2 million dollars. Is this institution exposed to technology risk in this case?

Yes or No