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

question 20

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 First Purchase.

• A) Odds ratio: 10.8675; a first-time home buyer is 10 times less likely to default than a buyer who has bought a home before.
• B) Odds ratio: 10.8675; a first-time home buyer is 11 times more likely to default than a buyer who has bought a home before.
• C) Odds ratio: 10.8675; a first-time home buyer is 10% times more likely to default than a buyer who has bought a home before.
• D) Odds ratio: 10.8675; a first-time home buyer is 11% times more likely to default than a buyer who has bought a home before.

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