Question

Pretend that you are a newly hired loan officer at a bank. Your new job is to approve or deny loan applications. You must approve all or none of a loan- you cannot approve part of it. 1- Come up with between at 15-30 association rules. For each association rule, compute the support and confidence of each rule. Note: 425 clients.

What you want to do is find a set of rules that will ID both bad and good loan risks. So, ID some great rules, and then write a short memo for your boss.

DO NOT give a walk-through for each rule you discover. Rather, you might want to choose 2-3 especially informative rules and briefly discuss them as examples, and assume your boss will get the point. The dataset included information about 425 clients.

Savings Acct	Employment	Gender	Marital Status	Housing	Job	Telephone	Foreign	Age	Credit Standing
Low	Short	M	Single	Own	Unskilled	Yes	Yes	23	Good
MedLow	Unemployed	M	Divorced	Own	Skilled	Yes	Yes	32	Bad		Rule
Low	Long	M	Single	Own	Management	No	Yes	38	Bad		Single
Low	Short	M	Single	Own	Unskilled	Yes	Yes	36	Bad		Single => good
MedLow	Medium	M	Single	Rent	Skilled	No	Yes	31	Good		Single => bad
No Acct	Short	M	Married	Own	Skilled	Yes	No	25	Good		Divorced
Low	Short	M	Married	Own	Unskilled	Yes	Yes	26	Good		Divorced => good
Low	Very Short	M	Single	Own	Unskilled	Yes	Yes	27	Good		Divorced => bad
Low	Short	M	Single	Own	Skilled	Yes	Yes	25	Bad		Married
No Acct	Very Short	F	Divorced	Own	Skilled	No	Yes	43	Bad		Married => good
Low	Unemployed	M	Single	Rent	Management	No	Yes	32	Bad		Married => bad

Answer 1

Objective : we will first look for the liquidity and then the employment status and then marital status with age. These are the variable we will look into while issuing loan to the particular clients. And on the basis of these variables we'll be able define the ratings of the customer. Now the given variables are given below:

1. Liquidity: In this we will see what type of liquidity they (clients) have. Like house is rented or own.

2. Employment status: what type of employment they and how much they are making from them, what type of skill they possess and we'll also look into duration of their job.

3. Marital status: check for whether both are employed or not. We'll also check the age.

And on the basis of all these variables we'll be able to draw a valid conclusion to whom loan should granted or not.