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

question 35

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 logistic model where
y = a binary response variable with value of 1 corresponding to a default,and 0 to a no default
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 %)
Using Minitab on the sample data,she arrived at the following estimates: Note: The p-values of the corresponding tests are shown in parentheses below the estimated coefficients.
What are the conclusions of testing the individual significance of the balance ratio and the debt ratio at the 1% level?

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Definitions:

Heart Development

The biological process of heart formation, which begins in the early stages of embryonic development and continues to mature after birth.

Gestation

The period of development from the fertilization of the egg to birth in mammals, varying in length among species.

Birth Weight

The weight of a baby at the time of birth, an important indicator of neonatal health and developmental outcomes.

Maturation

Physical development of the brain and body that prepares an infant for voluntary movement, such as rolling over, sitting, and walking.