According to Basel II's definition of operational loss event types, losses due to acts by third parties intended to
defraud, misappropriate property or circumvent the law are classified as
There are two bonds in a portfolio, each with a marketvalue of $50m. The probability of default of the two
bonds over a one year horizon are 0.03 and 0.08 respectively. If the default correlation is zero, what is the one
year expected loss on this portfolio?