Finance 1: The National Bank of Fort Worth, Texas, wants to examine methods for predicting sub-par payment performance on loans. It has data on unsecured consumer loans made over a 3-day period in October 2016 with a final maturity of 2 years. The data, which have been transformed to provide confidentiality, include the following. PASTDUE: Coded as 1 if the loan payment is past due and 0 if the loan is settled (i.e., currently paid in full). CBSCORE: Credit score generated by the CSC Credit Reporting Agency. Values range from 400 to 804, with higher values indicating a better credit rating. DEBT: This is a debt ratio calculated by taking required monthly payments on all debt and dividing it by the gross monthly income of the applicant and co-applicant. This ratio represents the amount of the applicant's income that will go toward repayment of debt. Values range between 0 and 99. GROSSINC: Gross monthly income of the applicant and co-applicant (Measured in hundreds of U.S. dollars). LOANAMT: Loan amount in USD (Measured in thousands of U.S. dollars). You have been asked to examine the feasibility of predicting past-due loan payment. THE RAW DATA FOR THIS QUESTION ARE **NOT** AVAILABLE TO YOU. Use the output below to answer the following questions. BUSN4000_HW11_Q6 (a) What is the response variable in this model? PASTDUE DEBT GROSSINC LOANAMT CBSCORE Correct: Your answer is correct. Out of a total of n = 348 Correct: Your answer is correct. loans in the sample, 150 Correct: Your answer is correct. were past due. (Enter your answers as whole numbers.) (b) Compute the odds ratio for the variable CBSCORE (Enter your answer rounded to three decimal places). OR = .983 Correct: Your answer is correct. Choose the proper interpretation of the odds ratio you calculated immediately above. An applicant without a credit score is _____ times as likely than one with a credit score to be past due. For every additional point on the applicant's credit score, a loan is approximately _____ times as likely to be settled. An applicant with a credit score is _____ times as likely than one without a credit score to be settled. For every additional point on the applicant's credit score, a loan is approximately _____ times as likely to be past due. An applicant without a credit score is _____ times as likely than one with a credit score to be settled. An applicant with a credit score is _____ times as likely than one without a credit score to be past due. Correct: Your answer is correct. (c) Compute the percent increase/decrease associated with the variable CBSCORE (Enter your answer rounded to two decimal places). 1.70 Incorrect: Your answer is incorrect. % Choose the proper interpretation of the percent increase/decrease you calculated immediately above by mentally inserting the ABSOLUTE VALUE of that number in the blanks below. The likelihood that a loan is past due is _____% times greater for those without a credit score. The likelihood that a loan is past due is _____% times greater for those with a credit score. The likelihood that a loan is past due is _____% times greater for every additional point on the applicant's credit score. The likelihood that a loan is settled decreases by _____% for every additional point on the applicant's credit score. The likelihood that a loan is past due increases by _____% for every additional point on the applicant's credit score. The likelihood that a loan is past due decreases by _____% for every additional point on the applicant's credit score. (d) Complete the following statement based on results from your previous work (Enter your answer rounded to three decimal places): For every additional point on the applicant's credit score, a loan is approximately 1.017 Correct: Your answer is correct. times more likely to be settled. (e) What is the model predicted probability of a loan being past due when the applicant has a credit score of 680, a debt ratio of 20, a gross monthly income of $2,000, and a loan amount of $40,000 (Enter your answer rounded to four decimal places)? P(The Loan is Past Due) = (f) What is the model predicted probability of a loan being past due when the applicant has a credit score of 680, a debt ratio of 25, a gross monthly income of $3,000, and a loan amount of $70,000 (Enter your answer rounded to four decimal places)? P(The Loan is Past Due) = What is the model predicted probability of a loan being settled when the applicant has a credit score of 680, a debt ratio of 25, a gross monthly income of $3,000, and a loan amount of $70,000 (Notice: This is the EXACT same applicant in terms of the x variables as the previous item) (Enter your answer rounded to four decimal places)? P(The Loan is Settled) =