Which of the Following Is the Major Weakness of the Linear

Multiple Choice

Which of the following is the major weakness of the linear probability model?

A) The model is based on past data of the borrower.
B) Measurement of the loan risk is difficult.
C) Estimated probabilities of default may lie outside the interval 0 to 1.
D) Neither the market value of a firm's assets nor the volatility of the firm's assets is directly observed.
E) None of the above is a weakness of the linear probability model.