Comprehensive and Detailed Explanation (AWS AI documents):

AWS machine learning fundamentals emphasize the bias–variance tradeoff as a core concept in building models that generalize well to unseen data. A model that is accurate on unseen (test or production) data must balance these two properties effectively.

Low bias means the model can capture the underlying patterns in the data and is not overly simplistic.

Low variance means the model’s predictions are stable and not overly sensitive to fluctuations or noise in the training dataset.

A model with low bias and low variance is best positioned to generalize well to new, unseen fraud data, which is critical in fraud detection systems where patterns evolve and false positives or false negatives can be costly.

Why the other options are incorrect:

High bias leads to underfitting and poor learning of fraud patterns.

High variance leads to overfitting, where the model performs well on training data but poorly on unseen data.

AWS AI Study Guide References:

AWS Machine Learning concepts: bias, variance, and generalization

AWS best practices for model training and evaluation in Amazon SageMaker