The following graph plots the fitted probabilities of default (y axis) depending on the credit balance (x axis) with the linear probability model(left) and the logistic model (right). Which alternative is NOT correct50010001500200025005001000150020002500BalanceBalanceO a. There will always be a balance level such that the probability of default according to the linear probability model is above 100%O b. The logit model supposes that the error term of the latent variable follows a logistic distributionO C. The linear probability model estimates probabilities of default below 0%Od.The probability of default lower than 50% is a frequent feature of linear probability modelse.The logistic model estimates probabilities between 0% and 100%0080 90 YO 0Probability of DefaultR'O 90 o zo o'oProbability of Default

Therefore hence option (c) is not correct.

The following graph plots the fitted probabilities of default (y axis) depending on the credit balance (x axis) with the linear probability model (left) and the logistic model (right). Which alternative is NOT correct 500 1000 1500 2000 2500 500 1000 1500 2000 2500 Balance Balance 80 90 O zo 00 Probability of Default 90 PO zo o Probability of Detfault

The following graph plots the fitted probabilities of default (y axis) depending on the credit balance (x axis) with the linear probability model (left) and the logistic model (right). Which alternative is NOT correct 500 1000 1500 2000 2500 500 1000 1500 2000 2500 Balance Balance 80 90 O zo 00 Probability of Default 90 PO zo o Probability of Detfault

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018

18th Edition

ISBN:9780079039897

Author:Carter

Publisher:Carter

Chapter10: Statistics

Section10.1: Measures Of Center

Problem 9PPS

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