The formula to calculate the Default Rate is:
\[ DFR = \frac{DF}{NDF} \times 100 \]
Where:
Let's say there are 20 defaults and 180 non-defaults. The default rate would be calculated as follows:
\[ DFR = \frac{20}{180} \times 100 \approx 11.11\% \]
So, the default rate is approximately 11.11%.
The default rate is a percentage that represents the proportion of defaults relative to non-defaults. It is calculated by dividing the number of defaults by the number of non-defaults and then multiplying by 100. This metric is often used in finance to assess the risk of default within a portfolio or group of loans.
