If the Regression Results for a Linear Probability Model of Mortgage

question 27

Multiple Choice

If the regression results for a linear probability model of mortgage application are given by: Approved_i = 0.6(0.12) + -0.05(0.001) Debt2IncomeRatio_i, with standard errors reported in parenthesis. How should we interpret the coefficient on the debt-to-income ratio variable?

• A) Increasing your debt to income ratio by 1 decreases your probability of being approved by 0.05.
• B) Increasing your debt to income ratio by 1 decreases your probability of being approved by 0.55.
• C) The probability of being approved for a mortgage is 0.05.
• D) The probability of being approved for a mortgage is 0.6.

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The illegal practice of deliberately avoiding paying the rightful amount of taxes by corporations, often through dishonest reporting or other means.

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The trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public, material information about the company.

Distributive Justice

The perceived fairness of outcomes distributed among members of a group, including resources, rewards, and responsibilities.

Business Relationship

The interaction, connection, or association between two or more businesses that arises from commercial transactions or mutual business interests.