Society of Actuaries (SOA) PA Practice Exam

Which term describes the number of different possible values for a categorical variable?

1. Granularity

2. Dimensionality

3. Variability

4. Continuity

The correct answer is: Dimensionality

Dimensionality is the term that describes the number of different possible values for a categorical variable. In statistics and data analysis, categorical variables are typically limited to a set of distinct categories or labels, and each category represents a possible value that a variable can take. The dimensionality reflects how many unique categories are available in the dataset for the categorical variable. Granularity refers to the level of detail or resolution in a dataset. While it can be related to how specific categories are defined, it doesn't directly describe the number of potential values. Variability measures how spread out or diverse the values of a variable are, which is more relevant to continuous or numerical data rather than the count of categories in a categorical variable. Continuity relates to the nature of a variable being continuous versus discrete. Categorical variables, by definition, are not continuous since their values are limited to separate categories. Therefore, dimensionality is the correct term for indicating the different possible values that a categorical variable can possess.