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7 ACCA New at Strategic Professional level questions with answers and explanations.
Printable worksheet with answer key
A model that fits the training data very closely but performs poorly on new data is:
Correct answer: Overfitted
Overfitting means that the model has learned noise.
A fraud model flags 50 of 1,000 transactions. 30 of the flagged are real fraud, and there are 40 frauds in total. The precision is:
Correct answer: 60%
Precision = true positives / flagged = 30 / 50 = 60 percent.
A fraud model flags 50 of 1,000 transactions. 30 of the flagged are real fraud, and there are 40 frauds in total. The recall is:
Accuracy can be a poor measure of performance when:
Correct answer: One class is very rare
A model that says 'no fraud' to all would be highly accurate but useless.
Grouping customers into segments without predefined labels is an example of:
Correct answer: Unsupervised learning (clustering)
Clustering finds structure without a target variable.
Predicting a customer's monthly spend as a number is a:
Splitting data into training and test sets is done to:
Correct answer: Estimate how the model will perform on unseen data
The test set must not be used in training.