A Data Scientist Has Explored and Sanitized a Dataset in Preparation

question 31

Multiple Choice

A data scientist has explored and sanitized a dataset in preparation for the modeling phase of a supervised learning task. The statistical dispersion can vary widely between features, sometimes by several orders of magnitude. Before moving on to the modeling phase, the data scientist wants to ensure that the prediction performance on the production data is as accurate as possible. Which sequence of steps should the data scientist take to meet these requirements?

• A) Apply random sampling to the dataset. Then split the dataset into training, validation, and test sets.
• B) Split the dataset into training, validation, and test sets. Then rescale the training set and apply the same scaling to the validation and test sets.
• C) Rescale the dataset. Then split the dataset into training, validation, and test sets.
• D) Split the dataset into training, validation, and test sets. Then rescale the training set, the validation set, and the test set independently.

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Definitions:

WACC

Weighted Average Cost of Capital, a measure of a company's cost of capital in which each category of capital is proportionately weighted.

Valuation Model

A framework or methodology used to determine the fair value of an asset, business, or investment based on its fundamentals and future earning potential.

FCFE

Free Cash Flow to Equity (FCFE) is the amount of cash available for distribution to shareholders after all expenses, reinvestment, and debt payments have been made.

Intrinsic Value

The actual, inherent value of a financial asset, determined through fundamental analysis without considering its market price.