Which of the Following Statements Is True

question 13

Multiple Choice

Which of the following statements is true?

• A)A credit scoring model is a mathematical model that considers a borrower's credit rating to make loan decisions.
• B)A credit scoring model is a model that relies on expert knowledge to make loan decisions.
• C)A credit scoring model is a mathematical model that uses observed borrower characteristics to calculate a score representing the applicant's probability of default or to sort borrowers into different default classes.
• D)A credit scoring model is a mathematical model that uses neural networks to make loan decisions.

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Definitions:

Tax Depreciation

A tax deduction that allows a company to recover the cost of property or assets it has purchased by reducing taxable income.

Book Depreciation

Book depreciation is the portion of the cost of a fixed asset that is written off annually on the financial statements of a company over the useful life of that asset, according to accounting standards.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income levels, activities, or other factors.

Deferred Tax

A liability on a company's balance sheet that results from income already taxed or to be taxed in the future.