The corresponding log-likelihood functions are as follows: where r = y- X(X'V-1 X)-X'V-1 y and p is the rank of X. ... An alternative is the statistic associated with the likelihood ratio test. This ...

Type 1 Analysis. A Type 1 analysis consists of fitting a sequence of models, beginning with a simple model with only an intercept term, and continuing through a model of specified complexity, fitting ...

Also, we introduce the likelihood-ratio test applied to the likelihood function derived from the one-factor model and suggest its usage for default probability validation, instead of a test that ...