When a Bank Has an Input File of FICO Scores

question 2

Multiple Choice

When a bank has an input file of FICO scores and uses machine learning to help predict credit losses for each customer,they are likely using which type of learning?

• A)Reinforcement Learning.
• B)Unsupervised Learning.
• C)Supervised Learning.
• D)Matrix Learning.

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Definitions:

Par

The face value of a bond or other security, at which it can be redeemed at maturity or the amount of money equal in value to a particular share or bond.

Coupon

The yearly payment of interest to those holding bonds, represented as a percentage of the bond's nominal value.

Semi-Annual Coupon

A bond payment made to bondholders twice a year, representing interest on the bond's face value.

Effective Annual Yield

The actual interest rate an investment earns in a year, taking into account the effects of compounding.