Zircon SA holds a loan whose credit risk has increased significantly since initial recognition; its loss allowance is therefore equal to the lifetime expected credit losses. Case convention: expected loss = exposure × probability of default × loss given default, without discounting. Exposure at default: 1,000,000; lifetime probability of default: 8 %; loss given default: 45 %. Calculate the lifetime expected credit loss.
- Exposure at default
- 1,000,000
- Lifetime probability of default
- 8 %
- Loss given default
- 45 %