Which of the Following Is a Problem in Using Discriminant

question 33

Multiple Choice

Which of the following is a problem in using discriminant analysis to evaluate credit risk?

• A)It does not consider gradations of default.
• B)The weights in the discriminant function are assumed to be dynamic.
• C)It can include hard-to-quantify factors.
• D)Data on loan specific information of banks are readily available.
• E)It does not assume that variables are independent of one another.

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Definitions:

Per Se

A Latin term often used in law to indicate something that is intrinsically or inherently the case, without needing further proof or qualification.

Foreseeable Misuse

A legal concept referring to the predictable and incorrect use of a product that manufacturers should anticipate and guard against.

Obvious Risks

Hazards or dangers that are clear and apparent, which a reasonable person would recognize.

Unforeseeable Consequences

Outcomes that could not reasonably be predicted or expected to result from specific actions or events.