The Following Is an Example of a Credit Scoring Model

question 56

Multiple Choice

The following is an example of a credit scoring model to estimate the probability of debt rescheduling for country I:

P_i = 0.25DSR_i + 0.17IR_i - 0.03 INVR_i + 0.84VAREX_i + 0.93 MG_i

Where P_i is the probability of rescheduling country I's debt;DSR is the country's debt service ratio;IR is the country's import ratio;INVR is the country's investment ratio;VAREX is the country's variance of export revenue;and MG is the country's rate of growth of the domestic money supply.

What is an important determinant of rescheduling probability if inflation is a prime concern?

• A)The debt service ratio.
• B)The import ratio.
• C)The investment ratio.
• D)The variance of export revenue.
• E)The rate of growth of the domestic money supply.

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