Chapter 4 · Section 3 practice

Nonlinear Models and Loss Classification

0 of 3 answered

These questions review the examples in the companion slides. Choose an answer, then check the explanation.

Question 1

Which claim is supported by a validation AUC of 0.544?

  • The model predicts a 54.4% return
  • Its default cutoff must be 0.5
  • The score showed modest event ranking in that sample, while calibration, costs and future performance need separate checks
  • The model should automatically block every trade

Question 2

A logit coefficient is log(2) per unit. What doubles for a one-unit increase, holding other inputs fixed?

  • The event probability at every starting value
  • The conditional odds
  • The expected next-month return
  • The classifier AUC

Question 3

Under squared-error gradient boosting, the next learner fits what?

  • The current residual direction
  • The future test returns before they arrive
  • Only the largest feature values
  • A causal treatment effect