Society of Actuaries (SOA) PA Practice Exam

What does the ROC Curve visualize?

1. True Positive Rate vs. False Positive Rate

2. False Negative Rate vs. True Negative Rate

3. Specificity vs. Sensitivity

4. Accuracy vs. Precision

The correct answer is: True Positive Rate vs. False Positive Rate

The ROC (Receiver Operating Characteristic) Curve visualizes the relationship between the True Positive Rate (TPR) and the False Positive Rate (FPR) across different thresholds for a binary classification problem. The True Positive Rate, also known as sensitivity or recall, represents the proportion of actual positives that are correctly identified as such, while the False Positive Rate indicates the proportion of actual negatives that are incorrectly classified as positives. By plotting these rates on a graph, where the x-axis represents the False Positive Rate and the y-axis represents the True Positive Rate, the ROC Curve provides valuable insight into the trade-offs between sensitivity and specificity (1 - FPR) at various threshold levels. The area under the ROC Curve (AUC) is often used as a summary measure of the model's performance, with a value closer to 1 indicating a better model. In contrast to the other options, which explore different metrics or relationships not represented accurately by the ROC Curve, the visualization of TPR against FPR is fundamental for assessing classifier performance and understanding how changes in the classification threshold impact the model's ability to distinguish between the two classes effectively.