Which One of the Following Best Defines the Term 'Credit

question 84

Multiple Choice

Which one of the following best defines the term 'credit scoring'?

• A) Categorizing customers into groups depending upon the length of time it takes each customer to pay for purchases
• B) Compiling a list of accounts receivables segregated by the length of time each receivable has been outstanding
• C) Evaluating the opportunity costs of a credit policy
• D) Process of quantifying the probability of default when granting credit to customers
• E) Tracking of both the number and the size of customer orders over a period of time

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Definitions:

Sample Data

Data collected from a subset of a population, used to make inferences or predictions about the larger group.

Population Variance

A measure of the dispersion or spread of a set of data points in a population, calculated by taking the average of the squared differences from the mean.

Critical Value

A threshold or boundary in hypothesis testing that defines the cutoff between the rejection or non-rejection of the null hypothesis.

Chi-square Distribution

A probability distribution that is used to analyze the variance in categorical data between observed and expected outcomes.