If a bank wants to differentiate between successful and unsuccessful credit risks for home mortgage loans, it should use _____.
A) factor analysis
B) multidimensional scaling
C) MANOVA
D) discriminant analysis

Question

Quizplus · Accepted Answer

Discriminant analysis is a statistical method used to differentiate between the groups based on one or more predictor variables. In this case, the bank can use discriminant analysis to identify the variables that differentiate successful and unsuccessful credit risks for home mortgage loans. This can help in making more informed lending decisions and minimizing the risk of defaults on loans. Factors analysis and Multidimensional scaling are not appropriate methods for this purpose, and MANOVA is used for testing differences in multiple dependent variables across multiple groups.

If a Bank Wants to Differentiate Between Successful and Unsuccessful