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Explanation:
The Peaks Over Threshold (POT) approach utilizes the Generalized Pareto Distribution (GPD), which has two parameters: a scale parameter () and a shape parameter (). In contrast, the Block Maxima approach utilizes the Generalized Extreme Value (GEV) distribution, which has three parameters: a location parameter (), a scale parameter (), and a shape parameter (). Therefore, the POT approach requires estimating fewer parameters than the GEV approach (2 versus 3). Additionally, the shape parameter () is identical for both distributions when modeling the same underlying data, meaning they share one parameter. Hence, choice A is correct.
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Q.4012 The peaks-over-threshold approach is a method used in extreme value theory to analyze the tail behavior of a distribution. This technique is particularly useful for assessing the risk of rare and extreme events. The peaks-over-threshold approach generally requires:
A
fewer estimated parameters than the GEV approach and shares one parameter with the GEV.
B
fewer estimated parameters than the GEV approach and does not share any parameters with the GEV approach
C
more estimated parameters than the GEV approach and shares one parameter with the GEV.
D
more estimated parameters than the GEV approach and does not share any parameters with the GEV approach.