Question: In the Universal Bank data in this chapter, only 10% of the records represented customers who had taken out a personal loan ( target variable).

In the Universal Bank data in this chapter, only 10% of the records represented customers who had taken
out a personal loan ( target variable). If we were to score a new customer based upon the attributes
we used in the algorhytm we would be accurate in the prediction about 90% of the time if we always
scored the indivual as "not accepting a personal loan" because that indeed is what customers have done
in the past. Why not accept being correct 90% of the time with this very simple decision rule?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

In the Universal Bank data in this chapter only 10% of the records represented customers that had taken out a personal loan (the target variable). If we were to score a new customer based upon the...

Q:

In the universal bank data in this chapter, only 10 percent of the records represented customers who had taken out a personal loan (the target variable). If we were to score a new customer based upon...

Q:

1. Personal Loan Acceptance. Universal Bank is a relatively young bank growing rapidly in terms of overall customer acquisition. Universal bank wants to convert its liability customers (depositors)...

Q:

K-nn: Personal Loan Acceptance.Universal Bank is a relatively young bank growing rapidly in terms of overall customer acquisition. Universal bank wants to convert its liability customers (depositors)...

Q:

Please carefully understand the question!! MS Excel & Word will be used. Baker Bank & Trust, Inc. is interested in identifying different attributes of its customers, and below is the sample data of...

Q:

Baker Bank & Trust, Inc. is interested in identifying different attributes of its customers, and below is the sample data of 30 customers. For a Personal loan, 0 represents a customer who has not...

Q:

Please carefully understand the question!! MS Excel will be used. Baker Bank & Trust, Inc. is interested in identifying different attributes of its customers, and below is the sample data of 30...

Q:

Assume that you are an analyst working for a local bank. You are tasked with helping the marketing team to understand factors impacting customer decisions and directly target individual customers who...

Q:

Assume that you are an analyst working for a local bank. You are tasked with helping the marketing team to understand factors impacting customer decisions and directly target individual customers who...

Q:

13.1 Acceptance of Consumer 1.0m Universal Bank has begun a program to encourage its existing mtstnrners to borrow 1iris a consumer loan program. The hank has promoted the loan to 5000 customers. of...

Q:

Use the Black-Scholes formula for calculations and show your steps. When evaluating N(z), use the values in the attached N(z) table. a. What is the price of a $35 strike European call? Assume the...

Q:

A wind-powered generator converts wind energy into electrical energy. Assume that the generator converts a fixed fraction of the wind energy intercepted by its blades into electrical energy. For wind...

Q:

Project cash flows should be estimated on what basis? A Annual B Incidental C Incremental D All of the above

Q:

ASC D From the Sources and Uses of Funds Statement shown below, calculate the estimated changes in loans and deposits from month-to-month, as well as estimated liquidity needs. (8 marks) Given the...