Exercise 27 describes the loan score method a bank uses to decide which applicants it will lend money. Only if the total points awarded for various aspects of an applicant’s financial condition fail to add up to a minimum cutoff score set by the bank will the loan be denied.
a) In this context, what is meant by the power of the test?
b) What could the bank do to increase the power?
c) What’s the disadvantage of doing that?