I was presented with a case where I had to calculate the probabilities given a case. Question as far as I remember:
We have 100,000 clients with a default risk of 2 %. Each client is asking 2 Euros.
Q1. What would be the minimum amount we can lose?
Q2. What would be the maximum amount we can lose?
Q3. What is the probability of 20,000 clients completely defaulting? Just tell us the formula.
Q4. What kind of distribution does the Q3 represent?