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

Question

Quizplus · Accepted Answer

The major weakness of the linear probability model is that the estimated probabilities of default may lie outside the interval 0 to 1, which can lead to unreliable predictions. This is because the linear probability model assumes a constant relationship between the dependent and independent variables, which may not hold true in reality. Options A, B, and D may also pose challenges, but they do not reflect the primary weakness of this model.

Which of the Following Is the Major Weakness of the Linear