Calculation of Bankruptcy Probability a Linear Probability Model You Have

question 108

Multiple Choice

Calculation of Bankruptcy Probability 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 = .05 (equity multiplier) + .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

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Racial Privileges

Advantages and entitlements granted to individuals based on their race, often at the expense of minority or marginalized groups, contributing to systemic inequality.

Immigrants

People who come to live permanently in a foreign country.

Ethnic Enclaves

Geographical areas or neighborhoods predominantly inhabited by people with similar ethnic backgrounds, often preserving their cultural heritage and social practices.

Fisher v. University of Texas

A significant court case related to affirmative action in higher education admissions in the United States, focusing on the University of Texas at Austin's use of race as a factor in its admissions process.