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Financial Risk Manager Part 1

Financial Risk Manager Part 1

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The logistic regression is well-recognized for its capability in dealing with binary dependent variable. It uses a cumulative logistic function transformation to bind the output between 0 and 1. In other words, the logistic model effectively turns real values into probabilities. Suppose we now have 3 features, and the functional form yiy_iyi​ is estimated as: yi=α+β1x1i+β2x2i+β3x3iy_i = \alpha + \beta_1 x_{1i} + \beta_2 x_{2i} + \beta_3 x_{3i}yi​=α+β1​x1i​+β2​x2i​+β3​x3i​ What is the probability that yi=0y_i = 0yi​=0?_

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