The Following Is an Example of a Credit Scoring Model

question 86

Multiple Choice

The following is an example of a credit scoring model to estimate the probability of debt rescheduling for country I:

P_i = 0.25DSR_i + 0.17IR_i - 0.03 INVR_i + 0.84VAREX_i + 0.93 MG_i

Where P_i is the probability of rescheduling country I's debt;DSR is the country's debt service ratio;IR is the country's import ratio;INVR is the country's investment ratio;VAREX is the country's variance of export revenue;and MG is the country's rate of growth of the domestic money supply.

According to this credit scoring model,the variable that has the highest positive impact on the probability of rescheduling is

• A)debt service ratio.
• B)import ratio.
• C)investment ratio.
• D)variance of export revenue.
• E)rate of growth of the domestic money supply.

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Definitions:

Clayton Act

A U.S. antitrust law enacted to prevent anti-competitive practices and promote fair competition.

Geographic Market

The defined area within which a company competes for customers, including factors of geography, demography, and economy.

Antitrust Law

Legislation aimed at preventing monopolies and promoting competition to protect consumers from unfair business practices.

Monopoly Power

is the ability of a single company or entity to control a significant portion of the market for a particular product or service, limiting competition.