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Before making an unsecured loan to an indiviudal a bank orders a report on the applicant's credit history. To justify making the loan, the bank
Before making an unsecured loan to an indiviudal a bank orders a report on the applicant's credit history. To justify making the loan, the bank must find the applicant's credit record to be satisfactory. The entire question is posted in the image provided. Please answer all parts and use PrecisionTree where asked. Question 3.26 is posted to only help with how to use PrecisionTree in question 3.4; only answer question 3.4. Thank you!
3.4 Before making an unsecured loan to an individual a bank orders a report on the applicant's credit history. To justify making the loan, the bank must find the applicant's credit record to be satisfactory. Describe the bank's decision. What are the bank's objectives? What risk does the bank face? What role does the credit report play? Using PrecisionTree, create an influ ence diagram of this situation. (Hint: Your influence diagram should include chance nodes for a credit report and for eventual default. Also, Pre- cision Tree can convert influence diagrams into decision tress and this ca be helpful in checking your work. See Problem 3.26 for instructions on conversion.) Finally, be sure to specify everything (decisions, chance events, objectives) in your model clearly enough to pass the clarity testStep by Step Solution
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