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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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A risk analyst working at a home loan company is in the process of updating a table that profiles the risks associated with borrowers. This table is crucial for creating and assessing home loans. The analyst is particularly interested in understanding the impact of government-backed mortgage companies in the United States—specifically Fannie Mae, Freddie Mac, and Ginnie Mae—on a borrower's likelihood of defaulting on their home loan. The following data has been collected:

  • There is a 62% probability that a borrower’s home loan is backed by one of these government agencies.
  • 32% of borrowers belong to the millennial age group.
  • Among the borrowers whose home loans are agency-backed, 17% are millennials.

Given these statistics, determine the probability that a millennial borrower has a home loan that is secured by a government agency.

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