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CCBA · Question #476

CCBA Question #476: Real Exam Question with Answer & Explanation

The correct answer is C. Sample size. The BA should consider the sample size for the validity of performance measures. The prepayment rates from the previous decade may not be representative of the current housing market conditions. A significant change in the market could render the old data irrelevant for predictin

Question

A deployed loan product was funded with the expectation of prepayment risk reduction. Initially key performance indicators would be to take similar loan prepayment rates over the previous 10- year period and compare it with the new product. After implementation, the business analyst (BA) determines that the decade old housing market is vastly different. Which of the following should the BA consider for validity of performance measures?

Options

  • ACurrency
  • BTiming
  • CSample size
  • DFrequency

Explanation

The BA should consider the sample size for the validity of performance measures. The prepayment rates from the previous decade may not be representative of the current housing market conditions. A significant change in the market could render the old data irrelevant for predicting current prepayment behavior. Therefore, the BA should ensure that the sample size is large enough and relevant to the current market to provide a valid comparison.

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