Using a Modified Discriminant Function Similar to Altman's,Burger Bank Estimates

question 74

Multiple Choice

Using a modified discriminant function similar to Altman's,Burger Bank estimates the following coefficients for its portfolio of loans:

Z = 1.4X₁ + 1.09X₂ + 1.5X₃

where X₁ = debt to asset ratio;X₂ = net income and X₃ = dividend payout ratio.

What is the Z-score if the debt to asset ratio is 40 percent,net income is 12 percent,and the dividend payout ratio is 60 percent?

• A)1.59.
• B)1.48.
• C)1.36.
• D)1.28.

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Definitions:

Intersectionality

A framework for understanding how various aspects of a person's social and political identities (gender, race, class, sexuality, etc.) combine to create different modes of discrimination and privilege.

Fluidity

The quality of being adaptable or variable, often used in the context of gender or sexuality to describe experiences that don't fit into fixed categories.

Salience

The quality of being particularly noticeable or important; the state of being prominent in the mind or in a situation.

Homogeneity

The quality or state of being all the same or all of the same kind, often used to describe a population or group with minimal diversity.