CS Professional · Artificial Intelligence, Data Analytics and Cyber Security - Laws and Practice · Data Analytics
A bank in Mumbai uses its customers' past repayment histories to estimate the probability that each applicant will default on a new loan. Which category of analytics does this represent?
This is predictive analytics, since the bank uses historical repayment data to estimate the probability of a future event, namely default. Descriptive and diagnostic analytics look backward at what happened and why, while prescriptive analytics recommends what action to take.
- ADescriptive analytics
- BDiagnostic analytics
- CPredictive analyticsCorrect
- DPrescriptive analytics
Explanation
Estimating the likelihood of a future event, such as default, from historical data is predictive analytics. Descriptive would merely report past default rates, diagnostic would explain past defaults, and prescriptive would suggest the best lending action based on predictions.
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