Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

PRMIA 8010 Exam - Topic 2 Question 75 Discussion

Which of the following statements are true:1. A high score according to Altman's Z-Score methodology indicates a lower default risk2. A high score according to the Probit or Logit models indicates a higher default risk3. A high score according to Altman's Z-Score methodology indicates a higher default risk4. A high score according to the Probit or Logit models indicates a lower default risk
D) 1 and 2
A) 3 and 4
B) 2 and 3
C) 1 and 4

PRMIA 8010 Exam - Topic 2 Question 75 Discussion

Actual exam question for PRMIA's 8010 exam
Question #: 75
Topic #: 2
[All 8010 Questions]

Which of the following statements are true:

1. A high score according to Altman's Z-Score methodology indicates a lower default risk

2. A high score according to the Probit or Logit models indicates a higher default risk

3. A high score according to Altman's Z-Score methodology indicates a higher default risk

4. A high score according to the Probit or Logit models indicates a lower default risk

Show Suggested Answer Hide Answer
Suggested Answer: D

A high score under the probit and logit models indicates a higher default risk, while under Altman's methodology it indicates a lower default risk. Therefore Choice 'd' is the correct answer.


by Refugia at Jul 30, 2025, 03:47 AM

Limited Time Offer

25%

Off

Get Premium 8010 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Sunshine
8 months ago
I thought high scores in both models meant lower risk?
upvoted 0 times
...
Rodolfo
8 months ago
Totally agree, that's a classic rule.
upvoted 0 times
...
Kina
9 months ago
Wait, isn't a high Probit score bad?
upvoted 0 times
...
Franklyn
9 months ago
Just to clarify, high Z-Score = good, right?
upvoted 0 times
...
Colene
9 months ago
Altman's Z-Score high means lower default risk!
upvoted 0 times
...
Rikki
9 months ago
I feel like I might mix up the Z-Score and the other models. I hope I remember that a high Z-Score means lower risk for sure.
upvoted 0 times
...
Lai
10 months ago
I practiced a similar question, and I think statement 2 is correct because higher scores in those models usually indicate higher risk, right?
upvoted 0 times
...
Lourdes
10 months ago
I'm a bit confused about the Probit and Logit models. I thought a higher score meant lower risk, but I can't recall for sure.
upvoted 0 times
...
Francisca
10 months ago
I remember that Altman's Z-Score is supposed to indicate lower default risk with higher scores, so I think statement 1 is true.
upvoted 0 times
...
Dick
10 months ago
I'm pretty confident on this one. A high Altman's Z-Score means lower default risk, and a high Probit/Logit score means higher default risk. So the correct answer is C - 1 and 4.
upvoted 0 times
...
Solange
10 months ago
Wait, I'm a bit confused. Didn't we learn that a high Altman's Z-Score means higher default risk? I'm not entirely sure about the Probit/Logit models though. Let me re-read the question carefully.
upvoted 0 times
...
Rolf
11 months ago
Okay, I think I've got this. A high Altman's Z-Score indicates lower default risk, while a high Probit/Logit score indicates higher default risk. So the answer must be B - 2 and 3.
upvoted 0 times
...
Marya
11 months ago
Hmm, this one seems a bit tricky. I'll need to carefully review the definitions of Altman's Z-Score and the Probit/Logit models to make sure I understand the relationship between the scores and default risk.
upvoted 0 times
...
Georgene
11 months ago
Haha, I can already see the exam invigilator shaking their head at these answers. 'Clearly, none of you have actually read the material!' *rolls eyes*
upvoted 0 times
...
Melissa
11 months ago
I'm pretty sure it's C. A high Z-Score means lower default risk, and a high Probit/Logit means lower default risk. Gotta love these financial models, always keeping us on our toes!
upvoted 0 times
...
Alonso
11 months ago
Wait, wait, wait... Isn't it the other way around? I thought a high Z-Score was good, and a high Probit/Logit was bad. Oh, the confusion!
upvoted 0 times
Destiny
8 months ago
I believe it’s C) 1 and 4. High Z-Score is good!
upvoted 0 times
...
Odelia
8 months ago
Exactly! So, what’s the right answer here?
upvoted 0 times
...
Kerry
8 months ago
Yeah, it’s confusing! High Probit/Logit is bad, right?
upvoted 0 times
...
Shenika
8 months ago
I thought high Z-Score means lower risk too!
upvoted 0 times
...
...
Vanda
1 year ago
Hmm, I think the correct answer is B. A high score according to Altman's Z-Score means higher default risk, and a high score in Probit or Logit models means higher default risk too. Simple as that!
upvoted 0 times
...
Carmela
1 year ago
I disagree, I believe the answer is B) 2 and 3.
upvoted 0 times
...
Ronny
1 year ago
I think the answer is A) 3 and 4.
upvoted 0 times
...

Save Cancel