The Probit Model

question 3

Multiple Choice

The probit model

• A)is the same as the logit model.
• B)always gives the same fit for the predicted values as the linear probability model for values between 0.1 and 0.9.
• C)forces the predicted values to lie between 0 and 1.
• D)should not be used since it is too complicated.

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Definitions:

Trading Investments

Securities that a company holds for the purpose of selling them in the short term to profit from price differences.

Valuation Allowance

A reserve established against deferred tax assets that may not be realized, ensuring that the asset's carrying amount does not exceed its likely realization.

Balance Sheet

A document showing a summary of a corporation's assets, liabilities, and equity of its shareholders at a certain moment, offering a glimpse into its financial health.

Income Statement

A document detailing a corporation's income and outgoings within a particular timeframe, concluding with either a profit or a loss.