Hi Dr Towey:
Just one question:
Why the sum of percentage of defaulters do not sum 100%?
Length of Loan, sums 100%
Car, do not.: 0.2+0.1+0.05
Company either 0.10+0.12+0.15.
If you suppose that each variable is totaly independent, you can
simple multiply each probability to find the overal probability of
each combination.
If you want relative probability may be you are thinking in
conditional probabillity?
Have a nice day
Kenneth
Kieran Towey wrote:
>Hi Allstat
>Quick question on risk analysis.
>Say it is to do with car loans.
>
>At a macro level, there are three categories each with three levels
>(They do not day how they calculated these "risks", I assume it is the historical percentage of defaulters)
>
>Length of Loan
>1-2 0.25
>2-4 0.35
>4+ 0.50
>
>Car
>Low Range 0.2
>Middle Range 0.1
>High Range 0.05
>
>Company
>A 0.10
>B 0.12
>C 0.15
>
>The question of interest is "what is the relative weights of the categories" on an individual basis.
>Now if we have individual data on each person, so for example Length2-4, Car Type Middle Range and with Company C is it correct to multiply the risks associated with each category and then perform a regression analysis on this response variable and use the standardised beta co-efficients as indicators of the relative weight of each category ?
>(This is what the owner of the data proposes).
>Cheers
>Kieran
>
>
>
--
Kenneth Roy Cabrera Torres
Celular +57 (315) 504 9339
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