Calculating the Probability of Bankruptcy a Linear Probability Model You

question 8

Multiple Choice

Calculating the Probability of Bankruptcy A linear probability model you have developed finds there are two factors influencing the past bankruptcy behavior of firms: the debt-to-equity ratio and the profit margin.Based on past bankruptcy experience,the linear probability model is estimated as:
PD_i = 0.03 (debt/equity) + 0.65 (profit margin)
A firm you are thinking of lending to has a debt-to-equity ratio of 105 percent and its expected probability of default,or bankruptcy,is estimated to be 7 percent.If sales are $3 million,calculate the firm's net income.

• A)$177,692
• B)$210,000
• C)$193,846
• D)$300,000

Understand how non-verbal cues can inform nursing assessments.

Know the importance of consistent, genuine communication in building therapeutic relationships.

Understand the termination phase of the nurse-patient relationship and the criteria for its successful completion.

Understand the relationship between stress and physical illness.

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Definitions:

Theory of Planned Behavior

A theory that predicts an individual's intention to engage in a behavior based on their attitudes, subjective norms, and perceived control over the behavior.

Reasonable People

Individuals who act with common sense and wisdom, making decisions based on rational thinking.

Systematic Use

The methodical and consistent employment of a procedure, tool, or system for intended outcomes.

Environmental Influences

External factors that impact an individual's behavior, development, and lifestyle, including social, cultural, and physical environments.