Determine which of the following statements about prediction is true.

• Each of several candidate regression models must produce the same prediction.
• When making predictions, it is assumed that the new observation follows the same model as the one used in the sample.
• A point prediction is more reliable than an interval prediction.
• A wider prediction interval is more informative than a narrower prediction interval.
• A prediction interval should not contain the single point prediction.

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

Key: B

A is false because different models are likely to produce different results.

B is true because using the fitted model implies that this model continues to apply.

C is false as there is no easy way to compare reliability of the two approaches.

D is false in that a narrower interval provides more useful information about the true value.

E is false in that the interval contains the most likely values with the point prediction being the single most likely point.