FinTech || with 100% Correct Answers.
What are some of the factors that allowed Ant Financial to become a dominant financial service provider in sucha short period of time? correct answers Large market
Unmet demand for financial services to lower end of the retail costumers/ complement rather than compete with incumbentbanks
Synergies from Alibaba -costumer focus, technologies, cross-selling, use of data
Relationship with regulator
Provide at least three drivers for the recent growth in FinTech. correct answers -Size, profitability, and the lack of efficiency of the financial sector
-Technology is enabling change Social networks, Big Data analytics, mobile accessibility, and new business models. -Financial crisis and regulatory response
o added business limits (e.g., trading) and compliance requirements (e.g., capital requirements) and compliance costs
o severely damaged banks' reputation and the public's trust in them
What are the opportunities and challenges of marketplace lending? correct answers Opportunities: expand access to credit,provide lower borrowing costs / higher savings rates,
Challenges: credit models are untested, investor mix has been shifting toward institution resulting in high concentration, capital may be volatile, incumbents have access to lower costs of
borrowing
What is a decision tree? What are the advantages of using a decision tree over a regular OLS regression? What are some of its disadvantages? correct answers A decision tree is a collection of nodes and branchesthat illustrate possible outcomes in a specified scenario. Each intermediate node is a binary cutoff. Advantages:intuitive, handles non-linear dependencies, can handle many different problems, easy to understand for nontechnical people Disadvantages: generates poor predictions/out of sample performance,
What does over-fitting mean? Provide an example that illustrate the issue, and a way to solve it. correct answers Overfitting is a modeling error which occurs when a function is too closely fitted
to a limited set of data points. Overfitting can occur...
-when you have large number of possible predictors/explanatory variables relative to the number of observations
You can fix it with...
-variable/model selection (LASSO/Ridge)
-usingtraining/testing data
-cross validation -increasing your sample size (not always possible)
You ran a logit regression of defaults on dtiand income and want to evaluate your model performance using a ROC curve. How do you produce the ROC curve and what feature of the curve would you use to judge the model's performance? correct answers Calculate false positive against true positive prediction rates for different cutoffs coming from the model
Judge performance with AUC (area under curve)
What is a hash? What are the properties of a good hash? correct answers A Hash is a function that can transformdata of any arbitrary size to data of a fixed size. A hash should have the following properties:
a)Determinism. A hash should always generate the same value if a specific value is given.
b)Resistance. For a given value n, it should be very hard to find m such that the result of hashing m is n; in addition, for a given m1, it should be very hard to find m2 such that hashing m1and m2
yields same results.
Explain the process of message encryption and decryption using the RSA asymmetric key encryption method. correct answers To facilitate the RSA encryption method, we need to following steps:
a)create a public key (n, e) and private key (d)
b)For a certain message m, we compute c = memod n. Then c will be the encrypted message.
c)For a certain encrypted message, we can decrypt it by using the formula m = cdmod n.
What is the difference between symmetric key encryption and asymmetric key encryption? What
are the main issues with symmetric key encryption that are solved with asymmetric key encryption? correct answers For symmetric key encryption, a same key is used for both encrypting and decrypting; however, for asymmetric key encryption, the keys used for encrypting and decrypting are different. The key issue solved by asymmetric encryption is the distribution of keys. If the keys are symmetric, to establish secure connection between each pair, a new key needs to be generated. However, with asymmetric key encryption, a new key is only needed when a new node is added. As a result ，we need much fewer keys with asymmetric key encryption.
Why do we need to put transactions into blocks? correct answers Appending the history of transactions incurs a fixed monetary cost associated with verification and latency cost associated
What are some of the factors that allowed Ant Financial to become a dominant financial service provider in sucha short period of time? correct answers Large market
Unmet demand for financial services to lower end of the retail costumers/ complement rather than compete with incumbentbanks
Synergies from Alibaba -costumer focus, technologies, cross-selling, use of data
Relationship with regulator
Provide at least three drivers for the recent growth in FinTech. correct answers -Size, profitability, and the lack of efficiency of the financial sector
-Technology is enabling change Social networks, Big Data analytics, mobile accessibility, and new business models. -Financial crisis and regulatory response
o added business limits (e.g., trading) and compliance requirements (e.g., capital requirements) and compliance costs
o severely damaged banks' reputation and the public's trust in them
What are the opportunities and challenges of marketplace lending? correct answers Opportunities: expand access to credit,provide lower borrowing costs / higher savings rates,
Challenges: credit models are untested, investor mix has been shifting toward institution resulting in high concentration, capital may be volatile, incumbents have access to lower costs of
borrowing
What is a decision tree? What are the advantages of using a decision tree over a regular OLS regression? What are some of its disadvantages? correct answers A decision tree is a collection of nodes and branchesthat illustrate possible outcomes in a specified scenario. Each intermediate node is a binary cutoff. Advantages:intuitive, handles non-linear dependencies, can handle many different problems, easy to understand for nontechnical people Disadvantages: generates poor predictions/out of sample performance,
What does over-fitting mean? Provide an example that illustrate the issue, and a way to solve it. correct answers Overfitting is a modeling error which occurs when a function is too closely fitted
to a limited set of data points. Overfitting can occur...
-when you have large number of possible predictors/explanatory variables relative to the number of observations
You can fix it with...
-variable/model selection (LASSO/Ridge)
-usingtraining/testing data
-cross validation -increasing your sample size (not always possible)
You ran a logit regression of defaults on dtiand income and want to evaluate your model performance using a ROC curve. How do you produce the ROC curve and what feature of the curve would you use to judge the model's performance? correct answers Calculate false positive against true positive prediction rates for different cutoffs coming from the model
Judge performance with AUC (area under curve)
What is a hash? What are the properties of a good hash? correct answers A Hash is a function that can transformdata of any arbitrary size to data of a fixed size. A hash should have the following properties:
a)Determinism. A hash should always generate the same value if a specific value is given.
b)Resistance. For a given value n, it should be very hard to find m such that the result of hashing m is n; in addition, for a given m1, it should be very hard to find m2 such that hashing m1and m2
yields same results.
Explain the process of message encryption and decryption using the RSA asymmetric key encryption method. correct answers To facilitate the RSA encryption method, we need to following steps:
a)create a public key (n, e) and private key (d)
b)For a certain message m, we compute c = memod n. Then c will be the encrypted message.
c)For a certain encrypted message, we can decrypt it by using the formula m = cdmod n.
What is the difference between symmetric key encryption and asymmetric key encryption? What
are the main issues with symmetric key encryption that are solved with asymmetric key encryption? correct answers For symmetric key encryption, a same key is used for both encrypting and decrypting; however, for asymmetric key encryption, the keys used for encrypting and decrypting are different. The key issue solved by asymmetric encryption is the distribution of keys. If the keys are symmetric, to establish secure connection between each pair, a new key needs to be generated. However, with asymmetric key encryption, a new key is only needed when a new node is added. As a result ，we need much fewer keys with asymmetric key encryption.
Why do we need to put transactions into blocks? correct answers Appending the history of transactions incurs a fixed monetary cost associated with verification and latency cost associated
