Business Esssentials

Question 1

Mean

Answer 1

The mean (average) of a data set is found by adding all numbers in the data set and then dividing by the number of values in the set.

Question 2

Mode

Answer 2

The mode is the number that occurs most often in a data set.

Question 3

Median

Answer 3

The median is the middle value when a data set is ordered from least to greatest.

Question 4

Standard Deviation

Answer 4

In statistics, the standard deviation is a measure of the amount of variation or dispersion of a set of values.[1] A low standard deviation indicates that the values tend to be close to the mean (also called the expected value) of the set, while a high standard deviation indicates that the values are spread out over a wider range.

Standard deviation may be abbreviated SD, and is most commonly represented in mathematical texts and equations by the lower case Greek letter σ (sigma), for the population standard deviation, or the Latin letter s, for the sample standard deviation.

Question 5

Correlation Coefficient

Answer 5

The correlation coefficient describes how one variable moves in relation to another. A positive correlation indicates that the two move in the same direction, with a value of 1 denoting a perfect positive correlation. A value of -1 shows a perfect negative, or inverse, correlation, while zero means no linear correlation exists.

Question 6

Descriptive Decision Making Methods

Answer 6

Pros and Cons
Rate and Weight
Flipping coins

Want a tight couple between the quality of the decision and the quality of outcome.

Question 7

Normative Decision Making Method

Answer 7

Decision analysis

Provide objective framework for for evaluating quantitative measure.

Decouple decision quality from outcome

Not to be used for everything — there is a cost

Mitigation against cognitive biases

Question 8

Stochastics

Answer 8

Uncertain / Random

What Are Stochastics? In technical analysis, stochastics refers to a group of oscillator indicators that point to buying or selling opportunities based on momentum. In statistics, the word stochastic refers to something that is subject to a probability distribution, such as a random variable.

Question 9

Decision Analysis Fundamentals

Answer 9

Clarity (required)
Observability (desired)
Usefulness (required)

Clarity is the most important

Question 10

Aleatory

Question 11

Epistemic

Question 12

Frequentists vs Bayesian

Answer 12

Frequentists is East Coast — US Bureau of Statsthey have tons of data. Bayesian is more West Coast it’s messy.

Question 13

Cumulative Distribution structure —

Answer 13

s-curve with total area maxed out

Question 14

Binomial Probability Distribution

Answer 14

provides combinations of binary outcomes —ways in which things can possibly occur and sum it all up.