Chapter 5

Problem 10. A finance company that leads to high risk automobile buyers, finds the following variables important in classifying default probabilities: time at the present residence, prior bankruptcy, prior bankruptcy filing (yes or no), time in present job, monthly income, phone in name (yes or no), prior repossession of item purchased on credit (yes or no), and type of residence (e.g., apartment, rent house, purchasing house), Listing each variable, suggestion whether each variable increase (+) or decrease (-) anticipated default risk, and how would evaluate the type of residence in assigning creditworthiness to applicants.