Below Gives the Data Concerning (1) the Dependent Variable Default

question 38

Multiple Choice

Below gives the data concerning (1) the dependent variable Default which equals 1 if a customer defaults on their loan and 0 if they do not; (2) the independent variable Price of Home, which is the price of the home (in tens) and (3) the independent variable First Purchase which equals 0 if the customer has owned a home before and 1 if this is their first home. Identify and interpret the odds ratio estimate for Price of Home.

• A) Odds ratio: 4.56789; for each addition $10 spent on a home, the odds of a person defaulting increased 4.56%
• B) Odds ratio: 4.56789; for each addition $100 spent on a home, the odds of a person defaulting increased 4.56%
• C) Odds ratio: 4.56789; for each addition $10 spent on a home, a default is 4 times more likely
• D) Odds ratio: 4.56789; for each addition $1000 spent on a home, a default is 4 times less likely for each additional $1,000 spent

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Definitions:

Current Cost

The amount of money that would have to be paid currently to replace an asset or to purchase a service.

Net Realizable Value

The estimated selling price of goods, minus the cost of their sale or completion.

Exit Value

The estimated amount that an asset or investment could be sold for at the end of its useful life.

Economic Resource

Assets or inputs that have the potential to contribute to the production of goods and services, providing economic benefit to businesses or individuals.