The credit risk exposure of the bank is another issue that needs attention. Unibank obtained the following data regarding the national average exposure of all banks and one competitor bank that serves the same target markets as Unibank:
Sectors
National average of all banks
UniBank
Competitor Bank
Small business loan
15%
15%
10%
Personal loans
10%
20%
10%
Housing loans
35%
25%
20%
Corporate loans
25%
5%
40%
Agricultural loan
5%
0%
5%
Car loan
10%
35%
15%
UniBank would like to estimate how much its loan portfolio deviates from the national average compared to the portfolio of the competitor bank. You are requested to calculate how much the loan portfolios of UniBank and the competitor bank deviate from the national average and to explain whether the deviation of UniBank is better or worse than the deviation of the competitor bank by providing reasons for it (6 marks).
a- Is the standard deviation of Unibank necessarily good or bad compared to the standard deviation of the competitor bank? Provide reasons for your answer. (2 marks)