Question 141 · 365 in bank
A customer list from a financial services company is shown below:
A data analyst wants to create a likely-to-buy score on a scale from 0 to 100, based on an average of the three numerical variables: number of credit cards, age, and income. Which of the following should the analyst do to the variables to ensure they all have the same weight in the score calculation?
Show answer
Answer: D
Explanation
D. Normalize the variables. Normalization involves transforming the values of the variables so that they have the same scale and range, typically from 0 to 1. This allows the analyst to ensure that each variable has the same weight in the calculation, since all the values are on the same scale. Normalizing the variables will also make it easier to interpret the results and compare the scores of different customers. This is important in creating a likely-to-buy score because it ensures that all three variables have an equal impact on the final score, rather than one variable having a larger weight due to its scale or range.
Source: Adapted from community discussion — ronniehaang