Financial condition is misclassified as financially strong

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Reference no: EM131872498

When a bank that is in poor financial condition is misclassified as financially strong, the misclassification cost is much higher than when a financially strong bank is misclassified as weak.

To minimize the expected cost of misclassification, the cutoff value for classification (which is currently at 0.5) should be increased (TRUE/FALSE?)

Reference no: EM131872498

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