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CMA Intermediate · Financial Management and Business Data Analytics · Introduction to Data Science for Business Decision-making

A Pune-based NBFC wants to predict which borrowers are likely to default. The team first meets the credit head to define the business problem, the target outcome and the success measure, before touching any data. In the standard data science life cycle, which stage is this?

This is the business understanding or problem definition stage. It is the first step of the data science life cycle, where the objective, the target outcome and the success measure are agreed with stakeholders before any data is collected, cleaned, modelled or deployed.

  1. ABusiness understanding / problem definitionCorrect
  2. BData preparation
  3. CModel deployment
  4. DModel evaluation

Explanation

The life cycle starts with understanding the business problem, defining objectives and success criteria. Data preparation, evaluation and deployment come later, so they cannot be the stage where the problem is first framed.

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