A Bank Manager Is Interested in Assigning a Rating to the Holders

question 21

Short Answer

A bank manager is interested in assigning a rating to the holders of credit cards issued by her bank. The rating is based on the probability of defaulting on credit cards and is as follows. To estimate this probability, she decided to use the logit model,
P = , where
y = a binary response variable which is 1 if the credit card is in default and 0 otherwise
x₁ = the ratio of the credit card balance to the credit card limit (in %)
x₂ = the ratio of the total debt to the annual income (in %)
The following output is obtained. Note: The p-values of the corresponding tests are shown in parentheses below the estimated coefficients.
What will be the rating for a person with a balance ratio of 15% and a debt ratio of 30%?

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Definitions:

Jung

Carl Jung was a Swiss psychiatrist and psychoanalyst who founded analytical psychology, known for his concepts of the collective unconscious and archetypes.

The Shadow

In Jungian psychology, an unconscious aspect of the personality which the conscious ego does not identify in itself, often encompassing traits or desires perceived as negative.

Unconscious Images

Visual or mental images that are not immediately accessible to conscious awareness, often affecting behaviors and emotions.

Jung

Carl Jung was a Swiss psychiatrist and psychoanalyst who founded analytical psychology, known for his theories on the collective unconscious, archetypes, and the process of individuation.