Suppose there were two factors influencing the past default behavior of borrowers:

the leverage or debt$$assets ratio $($D$/$A$)$ and the profit margin ratio $($PM$).$ Based on

past default $($repayment$)$ experience, the linear probability model is estimated as:

PDi $=0\mathrm{.}105($D$/$Ai $)-0\mathrm{.}35($PMi $)$