All of the Following Are Problems Associated with Using the Z-Score

question 64

Multiple Choice

All of the following are problems associated with using the Z-score model to make credit risk evaluations EXCEPT:

• A)the model does not benchmark firms to the average in the industry.
• B)the model does not use important data that is difficult to quantify such as the phase of the business cycle.
• C)the model categorizes firms as either high risk or low risk.
• D)All of these are problems associated with using the Z-score model.

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Definitions:

Mentally Unstable

Describes a state in which an individual experiences significant fluctuations in their mental health, affecting their thoughts, emotions, and behaviors.

Mental Disorders

A broad range of conditions affecting mood, thinking, and behavior, often leading to distress or impaired functioning.

Risk Factor

An aspect or variable associated with an increased likelihood of developing a disease or injury.

Violence

Behavior involving force intended to hurt, damage, or kill someone or something.