11-79 Which of the Following Is a Problem in Using

question 69

Multiple Choice

11-79 Which of the following is a problem in using discriminant analysis to evaluate credit risk?

• A)It does not consider gradations of default.
• B)The weights in the discriminant function are assumed to be dynamic.
• C)It can include hard-to-quantify factors.
• D)Data on loan specific information of banks are readily available.
• E)It does not assume that variables are independent of one another.

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Definitions:

Transform Faulting

A type of strike-slip fault where tectonic plates slide past each other horizontally, often causing earthquakes.

Subducted Plate

A tectonic plate that is being forced downward into the mantle by another plate at a subduction zone.

Plate Boundary

The edges where two tectonic plates meet, which can result in earthquakes, volcanic activity, and the formation of mountain ranges.

Subducted Plate

The portion of a tectonic plate that is forced below another plate into the Earth's mantle at a convergent boundary.