The following is an example of a credit scoring model to estimate the probability of debt rescheduling for country I: Pi= 0.25DSRi+ 0.17IRi- 0.03 INVRi+ 0.84VAREXi+ 0.93 MGi
Where Pi is the probability of rescheduling country I's debt; DSR is the country's total debt service ratio; IR is the country's import ratio; INVR is the country's investment ratio; VAREX is the country's variance of export revenue; and MG is the country's rate of growth of the domestic money supply.
According to this model, An FI would be most likely to lend to a country with
A) a low total debt service ratio.
B) a high import ratio.
C) a high investment ratio.
D) a low variance of export revenue.
E) a small rate of growth of the domestic money supply.
Correct Answer:
Verified
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