Credit Risk Analysis Exam 1 Practice Test

In pro rata data, how many banks are involved and what is the distribution?

One bank, 100% Three banks, 33% each Four banks, 25% each Two banks, 50/50

Correct Answer:

Two banks, 50/50

Explanation:

Pro rata means distributing a total amount in proportion to each participant’s share. When the data are pro rata and there are two banks, the simplest, standard interpretation is that they share the total equally unless there’s a stated weight for one bank over the other. So each bank receives 50% of the total. The other options imply either a different number of banks or unequal shares, which wouldn’t reflect a simple two-bank pro rata split. If there were more banks or different weights, the shares would adjust accordingly, but with two banks and no additional weighting, the 50/50 split is the natural pro rata outcome.

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