Which of the following is the major weakness of the linear probability model?

Question

Quizplus · Accepted Answer

One of the major weaknesses of the linear probability model is that estimated probabilities of default may lie outside the interval 0 to 1, which is theoretically impossible. This is because the linear probability model does not impose any restrictions on the estimated probabilities, making it less reliable compared to other more sophisticated models. The other options listed in the answer choices may also have limitations or weaknesses, but they are not specific to the linear probability model.

Which of the Following Is the Major Weakness of the Linear