Reconsider Problem 3.17.

a. Apply the classification tree algorithm, allowing a maximum of four splits as the stopping rule.

Assuming an applicant is classified as likely to default if they exceed a 10 percent chance of default, generate a classification tree.

b. Use the resulting classification tree to classify each of the three applicants from Problem 3.17

(a,

b, and

c) under consideration.

c. Repeat part

a, but now generate a classification tree assuming an applicant is classified as likely to default if they exceed a 5 percent chance of default.

d. Use the resulting classification tree to classify each of the three applicants from Problem 3.17

(a,

b, and

c) under consideration.