Identify the problem or problems of the linear discriminant model in default risk analysis.

Question

Accepted Answer

All of the above.

Answer

Model variables may change over time and differ across loan types.

Answer

The model requires that all included factors be quantifiable.

Answer

A centralized database of loans is normally not available for the model development.

Answer

The relative importance (weights) of the factors may not be stable over time or consistent across loan types.

Crowdly