expected loss & unexpected loss

llti20
Posts: 3
Joined: Thu Jun 13, 2013 6:42 am

expected loss & unexpected loss

Postby llti20 » Tue Aug 13, 2013 7:28 am

i was reading something about expected losses and unexpeted losses and would appreciate it if you clarify this for me. i read that expected losses are those anticipated reduction in value of loans advanced to borrowers by a bank over time for a given exposure while unepected losses also denotes the variability in potential loan loss around the expected loss.

if the unexpected loss is about variability then can i infer that unexpected loss is the standard deviation of expected loss?

thank you

vighnesh.mehta
Good Student
Posts: 16
Joined: Tue Sep 03, 2013 1:16 pm

expected loss & unexpected loss

Postby vighnesh.mehta » Thu Sep 05, 2013 2:19 am

Expected loss is the average forecast decline in value over a period of time. You can conclude that unexpected loss as the standard deviation of expected losses since it is a variable around the expected(average) loss level.


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