L2 Flashcards

1
Q

What is the arithmetic mean

A

The average x1+x2…xn/nx

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2
Q

What ate the pros and cons when using mean to gain information about a population

A

It is commonly said sed but it is heavily swayed by outliers and does not necessarily represent something typical or even a number in the data set

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3
Q

What is the median

A

The value in the middle if you order and flatten the set.

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4
Q

What is the benefit of using median

A

It is not affected by outliers

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5
Q

What is the mode in statistics

A

The value that is observed most frequently. Typvärde in swedish

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6
Q

What are the pros and cons of using mode to calculate the most typical value in a sample

A

Pro is that it is intuitive but con is that it can only be used if variables repeat

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7
Q

What does it mean that the distribution is unimodal or bimodal

A

That that there is one or two clusters of commonalities in the population f.ex the set could be 1122239988877 with modals around 2 and 8

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8
Q

What does a uniform distribution mean

A

That every value in the set is the same

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9
Q

What is told about median and mean in any symmetric distribution

A

They will be the same, if the distribution is unimodal the mode will also be equal

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10
Q

What can be told about median and mean in f the distribution is skewed

A

Mean will be biased against the direction of the skew

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11
Q

What is a weighted mean

A

A mean that is tampered with as some observations matter more than others

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12
Q

How can one calculate mean when we find the observations grouped together such as in a frequency table or histogram

A

By using the frequency as weights, makes sense 2 * 1 + 3 * 2 = 2+3+3

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13
Q

What is geometric mean

A

Mean that uses square root of multiplication instead of addition. Commonly used when calculating investment returns and average growth rates

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14
Q

What are the pros of using geometric mean

A

It is usually smaller (don’t know if pro) and it is less sensitive to outliers

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15
Q

What is dispersion

A

Dispersion, distribution or spread is how far the numbers are from each other, high spread on return often means high risk

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16
Q

What is a common name for mean, median and mode

A

Measures of central location

17
Q

What are some ways of measuring dispersion

A

Mean absolute deviation (MAD), variance and standard deviation as well as the coefficient of variation

18
Q

What is the range of a sample

A

The distance between the highest and lowest value of a sample

19
Q

Why is n-1 used as a denominator when calculating sample variance when N is used for population

A

To ensure that the sample variance is an unbiased estimator whatever that means, checkout the appendix 7.2 when the book arives

20
Q

What is the coefficient of variation

A

The ratio between the standard deviation and the mean

21
Q

What is mean variance analysis

A

The comparison of risk and reward showing what you will get in the long tun and what you can loose if you are unlucky

22
Q

What is the sharp ratio

A

The risk to reward ratio

23
Q

What foes a high sharp ratio mean

A

That the investment compensates for the risk well