A Linear Probability Model You Have Developed Finds There Are

question 114

Multiple Choice

A linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior of firms: the equity multiplier and the total asset turnover ratio. Based on past bankruptcy experience, the linear probability model is estimated as:
PD_i = 0.05 (equity multiplier) + 0.02 (total asset turnover)
A firm has an equity multiplier of 1.9 times and a probability of default of 10 percent. Calculate the firm's total asset turnover ratio.

• A) 0.25
• B) 25
• C) 2.5
• D) 0.75

Understand the eligibility for unemployment compensation following a discharge.

Identify the roles of management and HR during legal proceedings related to employment termination.

Recognize the procedures for the recovery of organizational property upon employee termination.

Understand the legal frameworks and Acts that protect employee rights and privacy in the workplace.

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Definitions:

Opportunity Cost

The potential benefit lost when choosing one alternative over another.

Excess Capacity

The amount by which current production capabilities exceed the current demand for a company's products or services.

Performance Evaluation

The process of assessing and reviewing an employee's or an organization's performance against predetermined objectives or criteria.

Bottom-line Profit

The net income or the final profit figure after all expenses, taxes, and costs have been subtracted from total revenues.