Data Handling & Descriptive Statistics

Question 1

Give examples of times when we would need quantitative methods for business decisions.

Answer 1

Testing whether financial markets are weak-from efficient (EMH), testing the CAPM, forecasting the correlation between the returns of the stock indices of two companies or countries

Question 2

What are the different types of data?

Answer 2

Time series, cross-sectional, panel data, and quantitative vs qualitative data

Question 3

Give examples of data and frequencies.

Answer 3

GDP or unemployment, firm stock prices or indices

Question 4

Give examples of problems where time series tools can be used.

Answer 4

How the value of a company’s stock price has varied when it announced the value of its dividend payment and the effect on a country’s currency after an increase in its interest rate

Question 5

What is cross-sectional data?

Answer 5

Data on one or more variables collected at a single point in time

Question 6

Give examples of cross-sectional data.

Answer 6

Cross-section of stock returns on the FTSE 100 and a sample of bond credit ratings for UK banks

Question 7

What problems can arise using the cross-sectional approach?

Answer 7

The relationship between company size and the return to investing in its shares and the relationship between a country’s GDP level and the probability that the government will default on its sovereign debt

Question 8

What is panel data?

Answer 8

Having the dimensions of both time series and cross-sections

Question 9

Give an example of panel data.

Answer 9

The daily prices of a number of blue chip stocks over two years

Question 10

What are the graphical methods that can be used?

Answer 10

Time series graph (line chart), histograms, scatter graph

Question 11

How can we transform data?

Answer 11

By using calculations in order to see whether the information can be obtained from the data

Question 12

What information can we obtain from a time-series graph?

Answer 12

Relationships, whether there has been a rise or drop

Question 13

What information can we obtain from a histogram?

Answer 13

We are able to group different countries and see how many countries belong to a specific group

Question 14

What information can we obtain from a scatter graph?

Answer 14

Relationships, comparing, any outliers

Question 15

What are descriptive statistics?

Answer 15

Numbers which summarise properties of a single variable

Question 16

What does descriptive measures provide?

Answer 16

A first look at the data and should also be presented in a study

Question 17

Give examples of descriptive statistics.

Answer 17

Mean, variance, standard deviation, median, mode, maximum, minimum, range, kurtosis, skewness

Question 18

What is a measure of central tendency?

Answer 18

A simplified view that describes the way in which a group of data cluster around the central value

Question 19

What descriptive statistics can be used to measure the central tendency?

Answer 19

Mean, median, and mode

Question 20

What descriptive statistics can be used to measure dispersion?

Answer 20

Range, standard deviation, and variance

Question 21

What is the median?

Answer 21

A robust measure of central tendency. It is the middle number

Question 22

How do we find the median if the number of observations are odd?

Answer 22

It will be the middle number

Question 23

How do we find the median if the number of observations are even?

Answer 23

It will be the average of the two middle numbers

Question 24

What is the mode?

Answer 24

The value that occurs most often

Question 25

How many modes can there be?

Answer 25

There may be no mode, one mode or several modes