Exhibit 10 $\text {Discriminant Analysis Report}$ $\quad$ $\quad$ $\quad$

question 22

Essay

Exhibit 10.7
The information below is used for the following questions.
An investor wants to classify companies as being a High Risk Investment, Group 1, a Medium Risk Investment, Group 2, or a Low Risk Investment, Group 3. He has gathered Liquidity, Profitability data on 18 companies he has invested in and produced the following spreadsheet. The following Discriminant Analysis output using Risk Solver Platform (RSP) has also been generated.
$\text {Discriminant Analysis Report}$
$\quad$$\quad$$\quad$$\quad$$\text {October 3,2010}$$\quad$$\quad$$\text {6:09:36PM}$
$\text {Unpooled Estimates of within-group Covariance matrices are used, assuming they are differen}$

$\text { Group Centroids }$

$\begin{array}{crr}\text { Group } & \mathrm{X} 1 & \mathrm{X} 2 \\\hline 1 & 0.913333333 & 0.316666667 \\2 & 0.856 & 0.288 \\3 & 0728571420 & 023\end{array}$




$\text { Group Frequencies }$
$\begin{array}{cr}&\text { Relative }\\\text { Group } & \text { Frequency } \\\hline 1 & 33.33 \% \\2 & 27.78 \% \\3 & 38.80 \% \end{array}$
-Refer to Exhibit 10.7. Based on the 18 observations in the model complete the following confusion/classification matrix.
$\begin{array}{lllll}\text { Actual } & \text { Group 1 } & \text { Group 2 } & \text { Group } 3 & \text { Total } \\\hline \text { Group } 1 & & & \\\text { Group } 2 & & & \\\text { Group } 3 & & & \\\text { Total } & & &\\\\\text { \% Correct }&&\end{array}$

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Definitions:

Employers

Individuals or organizations that hire workers to perform specific jobs in exchange for compensation.

Trait Anxiety

A personality characteristic that denotes an individual's tendency to perceive a wide range of situations as threatening and respond with anxiety.

Manage Anxiety

Techniques or strategies employed to control feelings of worry and nervousness.

Procedures

Step-by-step instructions designed to perform a specific task or solve a particular problem.