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Question 163 - MLS-C01 discussion

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A Machine Learning Specialist works for a credit card processing company and needs to predict which transactions may be fraudulent in near-real time. Specifically, the Specialist must train a model that returns the probability that a given transaction may fraudulent.

How should the Specialist frame this business problem?

A.
Streaming classification
Answers
A.
Streaming classification
B.
Binary classification
Answers
B.
Binary classification
C.
Multi-category classification
Answers
C.
Multi-category classification
D.
Regression classification
Answers
D.
Regression classification
Suggested answer: B

Explanation:

The business problem of predicting whether a new credit card applicant will default on a credit card payment can be framed as a binary classification problem. Binary classification is the task of predicting a discrete class label output for an example, where the class label can only take one of two possible values. In this case, the class label can be either ''default'' or ''no default'', indicating whether the applicant will or will not default on a credit card payment. A binary classification model can return the probability that a given applicant belongs to each class, and then assign the applicant to the class with the highest probability. For example, if the model predicts that an applicant has a 0.8 probability of defaulting and a 0.2 probability of not defaulting, then the model will classify the applicant as ''default''. Binary classification is suitable for this problem because the outcome of interest is categorical and binary, and the model needs to return the probability of each outcome.

References:

AWS Machine Learning Specialty Exam Guide

AWS Machine Learning Training - Classification vs Regression in Machine Learning

asked 16/09/2024
Nicklas Magnusson
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