Business Credit-Scoring Models Suffer from Several Weaknesses

question 57

Multiple Choice

Business credit-scoring models suffer from several weaknesses. These include which of the following?
I. Credit-score models are not statistically sound tools to use in making a lending decision.
I. The appropriate weights on a credit-score model are likely to change unpredictably over time.
II. These models ignore non-quantifiable behavioral factors,such as a relationship with the bank and reputation.
IV. Credit-scoring models discriminate against minorities.

• A)I and II only
• B)II and III only
• C)II,III,and IV only
• D)I,II,and III only
• E)I,II,III,and IV

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Definitions:

Performance Opportunities

Situations or circumstances that allow individuals or organizations to showcase or enhance their abilities and results.

Systematic Thinkers

Individuals who approach problems or situations with a methodical and logical process, often considering the overall structure, function, and order.

Strategic Opportunism

The ability to remain focused on long-term objectives while being flexible in dealing with short-term problems.

Long-term Objectives

Goals or targets set to be achieved over an extended period, typically looking several years into the future.