Hello I have a question to clarify on page 5, 2nd bullet point. “Prices should reflect the cost of risk (capital) in addition to funding costs...” May I know if the funding costs refers to the company’s cost of capital and not premium funding? So the reading is talking about cost of risk capital and cost of company capital?
it could be either your shareholder's equity or your borrowed money to fund the project. This is before you calculate your expected loss/risk capital - money needed to cover ur expected loss and unexpected losses.
