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

question 7

Essay

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.
If only applicants with excellent and good ratings are qualified for a loan, find a linear relation between their balance ratio and their debt ratio that must be satisfied to be qualified.

Outline the competencies crucial for effective counseling across different contexts and for various clients.

Describe client factors and extratherapeutic factors affecting therapy effectiveness.

Understand ethical considerations in counseling, especially concerning confidentiality, diversity, and personal biases.

Explain the placebo effect and its significance in the context of counseling outcomes.

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Definitions:

Imperfect Competitor

A firm or entity that has some control over the market price of its product because it does not operate in a perfectly competitive market.

Perfect Competitor

A theoretical market structure where many firms offer identical products, firms are price takers, and there are no barriers to new firms entering the market.

Imperfect Competitor

A market participant who does not follow the norms of perfect competition, possibly due to having some control over prices or market share.

MRP

The additional revenue a firm earns by employing one more unit of input, assuming other inputs remain constant, often used in the context of labor.