Solved

Suppose That a Bank Wishes to Predict Whether or Not

question 44

Multiple Choice

Suppose that a bank wishes to predict whether or not an existing holder of its Silver credit card will upgrade, for an annual fee, to its Platinum credit card. To do this, the bank carries out a pilot study that randomly selects 40 of its existing Silver card holders and offers each Silver card holder an upgrade to its Platinum card. Here, the response variable Upgrade equals 1 if the Silver card holder decided to upgrade and 0 otherwise. Moreover, the predictor variable Purchases is last year's purchases (in thousands of dollars) by the Silver card holder, and the predictor variable PlatProfile equals 1 if the Silver card holder conforms to the bank's Platinum profile and 0 otherwise. Below is the classification tree they derived from the data collected in the study. Assume they classify those with an upgrade probability estimate of at least .5 as upgraders. Based on this classification tree, a member of the study sample who made $50,450 in purchases last year, did not conform to the bank's Platinum profile, and upgraded to the Platinum card would be…

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