Chapter 7 Intro To Risk Analysis Flashcards
Theoretical probability
Probability that is based on the theoretical principles rather than an actual experience
Empirical probability
A probability measure that is based on actual experience through historical data or from the observation of facts
Probability analysis
A technique for forecasting events such as accidental or business losses on the assumption that they are governed by an unchanging probability distribution
Probability distribution
A presentation via table chart or graph of probability estimates of a particular set of circumstances and of the probability of each possible outcome
Central tendency
The single outcome that is the most representative of all possible outcomes included within a probability distribution
Dispersion
The variation among values in a distribution
Expected value
The weighted average of all of the possible outcomes of a probability Distribution
Mean
The sum of the values in a data set divided by the number of values
Standard deviation
A measure of dispersion’s between the values in a distribution and the expected value or mean of the distribution, calculated by taking the square root of the variance
Coefficient of variation
A measure of dispersion calculated by dividing a distributions standard deviation by its mean
Normal distribution
The probability distribution that, when graft, generate a bell shaped curve
Trend analysis
And analysis that identifies patterns in pass data and then projects these patterns into the future
Regression analysis
I statistical technique that is used to estimate relationships between variables
Linear regression analysis
A form of regression analysis that assumes that the change in the dependent variable is constant for each unit of change in the independent variable
