L2 Flashcards
What is the arithmetic mean
The average x1+x2…xn/nx
What ate the pros and cons when using mean to gain information about a population
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
What is the median
The value in the middle if you order and flatten the set.
What is the benefit of using median
It is not affected by outliers
What is the mode in statistics
The value that is observed most frequently. Typvärde in swedish
What are the pros and cons of using mode to calculate the most typical value in a sample
Pro is that it is intuitive but con is that it can only be used if variables repeat
What does it mean that the distribution is unimodal or bimodal
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
What does a uniform distribution mean
That every value in the set is the same
What is told about median and mean in any symmetric distribution
They will be the same, if the distribution is unimodal the mode will also be equal
What can be told about median and mean in f the distribution is skewed
Mean will be biased against the direction of the skew
What is a weighted mean
A mean that is tampered with as some observations matter more than others
How can one calculate mean when we find the observations grouped together such as in a frequency table or histogram
By using the frequency as weights, makes sense 2 * 1 + 3 * 2 = 2+3+3
What is geometric mean
Mean that uses square root of multiplication instead of addition. Commonly used when calculating investment returns and average growth rates
What are the pros of using geometric mean
It is usually smaller (don’t know if pro) and it is less sensitive to outliers
What is dispersion
Dispersion, distribution or spread is how far the numbers are from each other, high spread on return often means high risk
What is a common name for mean, median and mode
Measures of central location
What are some ways of measuring dispersion
Mean absolute deviation (MAD), variance and standard deviation as well as the coefficient of variation
What is the range of a sample
The distance between the highest and lowest value of a sample
Why is n-1 used as a denominator when calculating sample variance when N is used for population
To ensure that the sample variance is an unbiased estimator whatever that means, checkout the appendix 7.2 when the book arives
What is the coefficient of variation
The ratio between the standard deviation and the mean
What is mean variance analysis
The comparison of risk and reward showing what you will get in the long tun and what you can loose if you are unlucky
What is the sharp ratio
The risk to reward ratio
What foes a high sharp ratio mean
That the investment compensates for the risk well
