# ULC or Risk Contribution

#### Randy Moon

##### New Member
Subscriber
I'm also having a difficult time reconciling the ULC / RC formula (as provided in Schroeck) with the actual practice question solution in the credit risk focus study.

Formula

Solution in focus review - I don't see where the circled values are appearing in this formula above. Any insight would be appreciated.

#### bollengc

##### Member
Subscriber
I'm also having a difficult time reconciling the ULC / RC formula (as provided in Schroeck) with the actual practice question solution in the credit risk focus study.

Formula
View attachment 3670

Solution in focus review - I don't see where the circled values are appearing in this formula above. Any insight would be appreciated.
View attachment 3671
it is just derived from the formula for RCi, maybe if you take a pen and paper and replace the i and j by the actual components for that exercise, you will find it immediately.

RC1= ULC1 = (UL1 * rho11/ULp + UL2 * rho12 / ULp) * UL1 = UL1 * (UL1 + UL2 * rho12) / ULp
same for RC2 = UL2 * (UL2 + UL1 * rho12) / ULp

what you circled are just UL1 in RC1 and UL2 in RC2

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