Question
What is the key distinction between supervised and unsupervised learning?
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Answer
Supervised uses labeled outcomes; unsupervised finds patterns without labels.
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Question
Why is overfitting dangerous in an investment model?
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Answer
It fits noise in sample and performs poorly out of sample.
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Question
What is data snooping in model development?
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Answer
Repeatedly mining data until a spurious pattern appears significant.
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Question
How can a practitioner reduce overfitting risk in machine learning?
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Answer
Use out-of-sample testing and cross-validation.
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