A Linear Probability Model You Have Developed Finds There Are

question 115

Multiple Choice

A linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior of firms: the debt-to-equity ratio and the profit margin. Based on past bankruptcy experience, the linear probability model is estimated as:
PD_i = 0.02 (debt/equity) + 0.80 (profit margin)
A firm you are thinking of lending to has a debt-to-equity ratio of 110 percent and its expected probability of default, or bankruptcy, is estimated to be 8 percent. If sales are $2 million, calculate the firm's net income.

• A) $145,000
• B) $165,000
• C) $160,000
• D) $200,000

Understand the stages of development during the embryonic period.

Understand the role of education in the transmission of culture and promoting social inequalities.

Recognize the functionalist, conflict, and feminist perspectives on religion and education.

Analyze how religion serves as social capital and its societal consequences.

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