What is the conditional default rate?

What will be an ideal response?

The conditional default rate (CDR) is the annualized value of the unpaid principal bal­ance of newly defaulted loans over the course of a month as a percentage of the unpaid bal­ance of the pool (before scheduled principal payment) at the beginning of the month. The calculation begins with computing the default rate for the month as shown below:

Then, this is annualized as follows to get the CDR:
CDRt = 1 – (1 – default rate for month t)12

Business

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Indicate whether the statement is true or false

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