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The Following Is an Example of a Credit Scoring Model

Question 86

Multiple Choice

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 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 debt service ratio.
B) a high import ratio.
C) a high investment ratio.
D) a low variance of export revenue.

Correct Answer:

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