Suppose a Linear Probability Model You Have Developed Finds There

question 97

Multiple Choice

Suppose a linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior of firms: the debt ratio and the profit margin. Based on past bankruptcy experience, the linear probability model is estimated as: PDi = .15 (debt ratio) + .1 (profit margin)
A firm you are thinking of lending to has a debt ratio of 57 percent and a profit margin of 7.15 percent. Calculate the firm's expected probability of default, or bankruptcy.

• A) 9.27%
• B) 8.49%
• C) 7.83%
• D) 6.91%

Recognise the importance and application of human, technical, and conceptual skills in management.

Explain the significance of developing strong interpersonal relationships within the workplace for effective management.

Discuss the process and importance of measuring work performance and taking corrective actions.

Understand the continual need for personal and professional development for career success.

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Definitions:

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A medical specialist who diagnoses and treats disorders of the endocrine system, such as diabetes, thyroid diseases, and hormonal imbalances.

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A medical doctor specializing in diagnosing and treating disorders and injuries of the musculoskeletal system, including bones, joints, and muscles.

Dermatologist

A specialist who diagnoses and treats diseases of the skin, hair, and nails.

Orthopedist

A medical doctor specialized in diagnosing and treating disorders and injuries of the musculoskeletal system.