Which of the Following Statements Is Incorrect

question 22

Multiple Choice

Which of the following statements is incorrect?

• A) While linear probability models divide firms into high or low bankruptcy risk classes, logit models and linear discriminant models produce a value for the expected probability of bankruptcy.
• B) The logit model overcomes a weakness of the linear probability model by restricting the estimated range of bankruptcy probabilities to lie between 0 and 1.
• C) All three credit scoring models use past data, such as financial ratios, as inputs to explain repayment experiences on old debt.
• D) All of the statements are correct.

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Definitions:

Fair Labor Standards Act

A U.S. law that sets out various labor regulations regarding interstate commerce employment, including minimum wages, requirements for overtime pay, and limitations on child labor.

Gross Earnings

The total income earned by an individual or company before deductions such as taxes and retirement contributions.

Regular Earnings

Income received from standard work hours or salary, excluding overtime or bonuses.

FICA-OASDI

Federal Insurance Contributions Act - Old Age, Survivors, and Disability Insurance, a U.S. payroll tax that funds Social Security and is shared between employers and employees.