Below gives the data concerning (1) the dependent variable Default which equals 1 if a customer defaults on their loan and 0 if they do not; (2) the independent variable Price of Home, which is the price of the home (in tens) and (3) the independent variable First Purchase which equals 0 if the customer has owned a home before and 1 if this is their first home. Identify and interpret the odds ratio estimate for Price of Home.
A) Odds ratio: 4.56789; for each addition $10 spent on a home, the odds of a person defaulting increased 4.56%
B) Odds ratio: 4.56789; for each addition $100 spent on a home, the odds of a person defaulting increased 4.56%
C) Odds ratio: 4.56789; for each addition $10 spent on a home, a default is 4 times more likely
D) Odds ratio: 4.56789; for each addition $1000 spent on a home, a default is 4 times less likely for each additional $1,000 spent

Question

Below gives the data concerning (1) the dependent variable Default which equals 1 if a customer defaults on their loan and 0 if they do not; (2) the independent variable Price of Home, which is the price of the home (in tens) and (3) the independent variable First Purchase which equals 0 if the customer has owned a home before and 1 if this is their first home. Identify and interpret the odds ratio estimate for Price of Home.  
A) Odds ratio: 4.56789; for each addition $10 spent on a home, the odds of a person defaulting increased 4.56% 
B) Odds ratio: 4.56789; for each addition $100 spent on a home, the odds of a person defaulting increased 4.56% 
C) Odds ratio: 4.56789; for each addition $10 spent on a home, a default is 4 times more likely 
D) Odds ratio: 4.56789; for each addition $1000 spent on a home, a default is 4 times less likely for each additional $1,000 spent

Quizplus · Accepted Answer

Since the odds ratio is 4.56789, for each addition of $10 on the home, a default is 4 times more likely.

Below Gives the Data Concerning (1) the Dependent Variable Default