Credit Risk Is the Risk That

question 1

Multiple Choice

Credit risk is the risk that

• A)an insufficient number of borrowers will apply for loans or credit.
• B)interest rates will rise after a loan has been granted.
• C)interest rates will fall after a loan has been granted.
• D)borrowers might default on their loans.

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Definitions:

Alternative Hypothesis

The hypothesis that proposes a significant difference, relationship, or effect, and is accepted if the null hypothesis is rejected.

Simple Linear Regression

A statistical method that models the relationship between a dependent variable and one independent variable, assuming a linear relationship.

68-95-99.7 Rule

A statistical rule stating that for a normal distribution, approximately 68% of the data falls within one standard deviation of the mean, 95% within two standard deviations, and 99.7% within three standard deviations.

Observed Responses

Observed responses refer to the actual outcomes or reactions recorded in an experiment or survey, following exposure to certain conditions or stimuli.