Solved

A Bank Manager Is Interested in Assigning a Rating to the Holders

Question 21

Short Answer

A bank manager is interested in assigning a rating to the holders of credit cards issued by her bank. The rating is based on the probability of defaulting on credit cards and is as follows. A bank manager is interested in assigning a rating to the holders of credit cards issued by her bank. The rating is based on the probability of defaulting on credit cards and is as follows. To estimate this probability, she decided to use the logit model, P = , where y = a binary response variable which is 1 if the credit card is in default and 0 otherwise x<sub>1</sub> = the ratio of the credit card balance to the credit card limit (in %) x<sub>2</sub> = the ratio of the total debt to the annual income (in %) The following output is obtained. Note: The p-values of the corresponding tests are shown in parentheses below the estimated coefficients. What will be the rating for a person with a balance ratio of 15% and a debt ratio of 30%? To estimate this probability, she decided to use the logit model,
P = A bank manager is interested in assigning a rating to the holders of credit cards issued by her bank. The rating is based on the probability of defaulting on credit cards and is as follows. To estimate this probability, she decided to use the logit model, P = , where y = a binary response variable which is 1 if the credit card is in default and 0 otherwise x<sub>1</sub> = the ratio of the credit card balance to the credit card limit (in %) x<sub>2</sub> = the ratio of the total debt to the annual income (in %) The following output is obtained. Note: The p-values of the corresponding tests are shown in parentheses below the estimated coefficients. What will be the rating for a person with a balance ratio of 15% and a debt ratio of 30%? , where
y = a binary response variable which is 1 if the credit card is in default and 0 otherwise
x1 = the ratio of the credit card balance to the credit card limit (in %)
x2 = the ratio of the total debt to the annual income (in %)
The following output is obtained. A bank manager is interested in assigning a rating to the holders of credit cards issued by her bank. The rating is based on the probability of defaulting on credit cards and is as follows. To estimate this probability, she decided to use the logit model, P = , where y = a binary response variable which is 1 if the credit card is in default and 0 otherwise x<sub>1</sub> = the ratio of the credit card balance to the credit card limit (in %) x<sub>2</sub> = the ratio of the total debt to the annual income (in %) The following output is obtained. Note: The p-values of the corresponding tests are shown in parentheses below the estimated coefficients. What will be the rating for a person with a balance ratio of 15% and a debt ratio of 30%? Note: The p-values of the corresponding tests are shown in parentheses below the estimated coefficients.
What will be the rating for a person with a balance ratio of 15% and a debt ratio of 30%?

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q16: The model y = β<sub>0</sub> + β<sub>1</sub>x

Q17: Like any other university, Seton Hall University

Q18: To examine the differences between salaries of

Q19: For a linear regression model with a

Q20: The logit model can be estimated with

Q22: The major advantage of a logit model

Q23: Consider the following regression model: Humidity =

Q24: A researcher has developed the following regression

Q25: For the logit model, the predicted values

Q26: A medical researcher is interested in assessing