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Hi @David Harper CFA FRM

I am not able to understand below graph completely. I do understand the curve of the model and why it is upward sloping but at a decreasing rate. The curve of our model is increasing at a decreasing rate. This is so because it's cumulative distribution curve. If we increase 1% from of 9 to 10, which falls in high-risk percentage zone, a fraction of defaults will be more as compared to when we move same 1% from 90 to 91 which falls in the low risk zone. Thus a cumulative increase in the high zone will be more as compared to low risk zone hence the curve of the model.

I

I am not able to understand below graph completely. I do understand the curve of the model and why it is upward sloping but at a decreasing rate. The curve of our model is increasing at a decreasing rate. This is so because it's cumulative distribution curve. If we increase 1% from of 9 to 10, which falls in high-risk percentage zone, a fraction of defaults will be more as compared to when we move same 1% from 90 to 91 which falls in the low risk zone. Thus a cumulative increase in the high zone will be more as compared to low risk zone hence the curve of the model.

**What I didn't understand**is " assume that the scoring model predicts that 10 percent of the accounts will default in the next 12 months"**Where is the time component in this graph**?**If the blue line represents a random model, the gray line represents our current model and does the red line represents our perfect model? if not how will the perfect model line look like?**I

**n a perfect model, if we move from 0% to 10% in x-axis then the curve will be such that at 10% of x-axis it will show the corresponding 10% of y-axis?****How will the curve of the perfect model look?**
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