Determine which of the following statements is NOT true about clustering methods.

• Clustering is used to discover structure within a data set.
• Clustering is used to find homogeneous subgroups among the observations within a data set.
• Clustering is an unsupervised learning method.
• Clustering is used to reduce the dimensionality of a dataset while retaining explanation for a good fraction of the variance.
• In K-means clustering, it is necessary to pre-specify the number of clusters.

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.

Key: D

Item D is a statement about principal components analysis, not clustering.

Copyright 2023. The Society of Actuaries, Schaumburg, Illinois. Reproduced with permission.