Consider the Following Probit Regression

question 24

Essay

Consider the following probit regression
Pr(Y = 1 X)= Φ(8.9 - 0.14 × X)
Calculate the change in probability for X increasing by 10 for X = 40 and X = 60.Why is there such a large difference in the change in probabilities?

---

Definitions:

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or a named party.

Collection Delay

The time it takes for a business to receive payments owed by its customers after the sale or service has been delivered.

Miller-Orr Model

A model used in financial management to manage cash flows and liquidity levels, determining the optimal cash balance levels.

Weekly Interest Rate

The interest rate quoted or applied to a loan or savings account on a weekly basis.