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Question
The following is an example of a credit scoring model to estimate the probability of debt rescheduling for country I:
Pi= 0.25DSRi+ 0.17IRi- 0.03 INVRi+ 0.84VAREXi+ 0.93 MGi
Where Pi is the probability of rescheduling country I's debt; DSR is the country's debt service ratio; IR is the country's import ratio; INVR is the country's investment ratio; VAREX is the country's variance of export revenue; and MG is the country's rate of growth of the domestic money supply.
What is an important determinant of rescheduling probability if inflation is a prime concern?
A. The debt service ratio.
B. The import ratio.
C. The investment ratio.
D. The variance of export revenue.
E. The rate of growth of the domestic money supply.
Answer
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