Finance 2:A lending organization has acquired data on a sample of recent customers and is interested in building a model to predict whether or not a given customer will default on a loan. The available data are contained in the worksheet "Default" and the variables are defined as follows.

Default:Coded as "Yes" if the customer defaulted on the loan and "No" otherwise.

Student:Whether or not the customer is currently a student (coded Yes/No)

Balance:The average balance carried by the customerin hundreds of USD.

Income:The income of the customerin ten thousands of USD.

Fit the proper regression model to predict whether or not a customer will default on a loan. Fit the model so that the event being modeled is "Yes". Furthermore, code the variable Student so that "No" serves as the reference group. Finally, it is hypothesized that income has a curvilinear relationship with the likelihood of being in default. Therefore, fit a second-order polynomial model in terms of the variable Income to test this theory.

(a) Complete the following statement (Enter your first answer as a whole number and thepercentrounded to two decimal places).

Out of a total ofn=( )customers in the sample,( )%were in default.

Regardless of your conclusions above, use the full model for the remainder of these questions.

(e)Switching focus:State the odds ratio forBalance. (Round your answer to three decimal places.)

OR=

(f) Compute the percent increase/decrease associated with the variableBalance(Enter your answer rounded to two decimal places).

=( )%

(g) What is the predicted probability that a new customer will default on a loan when that customer is a student who has an average balance of $1,750.00and an income of $50,000.00(Enter your answer rounded to four decimal places)?

P(The Customer will Default) =

What is the predicted probability that a new customer will default on a loan when that customer is NOT a student, but has an average balance of $2,250.00and an income of $10,000.00(Enter your answer rounded to four decimal places)?

P(The Customer will Default) =

https://docs.google.com/spreadsheets/d/1DcXS96HY0qXiM4ntanyRb1fmCywtbxag58dFzNd6Tsc/edit?usp=sharing

Answer rating: 100% (QA)

Answer a Out of a total of n 1000 customers in the sample 340 were in default e The odds ratio for B... View the full answer