Actuarial Notes

Exam DISC-DA Practice Question 207

Study guide: Exam DISC-DA

A nearest-neighbor model for auto physical damage describes each policy by driver age (years) and vehicle value (dollars). A new policy has driver age 40 and vehicle value $30,000. Three training records are:

Record Driver age Vehicle value
R1 42 40,000
R2 60 31,000
R3 35 36,000

In the training data, driver age has a standard deviation of 10 years and vehicle value $8,000. Which record is the nearest neighbor by Euclidean distance, on raw values and on standardized values?

  • A) R2 on both raw and standardized values
  • B) R2 on raw values and R1 on standardized values
  • C) R2 on raw values and R3 on standardized values
  • D) R3 on both raw and standardized values

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