Module 7.1: Describing Data Sets Flashcards
What is descriptive statistics?
Used to summarize the important characteristics of large data sets.
What is inferential statistics?
Pertain to certain procedures used to make forecasts, estimates, or judgement about a large set of data on the basis of statistical characteristics.
What is a population?
Defined as a set of possible members of a stated group. For example, all stocks traded on the NYSE is a population.
What is a sample?
Subset of the population of interest. Sample characteristics can be used to define a population as a whole.
What are Nominal Scales?
Scale of measurement that contains the least information. Observations are classified or counted with no particular order.
What are Ordinal Scales?
High level of measurement than nominal scales. Every observation is assigned to one of several categories, and then the categories are ordered with respect to a specified characteristic. For example, we can tell the return on one stock is greater than the next, but we can’t tell if the difference between the two stocks is the same as stocks further down the list.
What are Interval Scales?
What is the weakness?
Measurements that provide relative ranking, like ordinal scales, plus the assurance that differences between scale values are equal. For example, temperature, 49 degrees is warmer than 30, and the difference between 49 and 30 is the same as other temperatures.
Weakness is that a measurement of zero does not indicate the total absence of what we are measuring, so that interval-scale based ratios are meaningless.
What are Ratio Scales?
Represent the most refined level of measurement. Provide ranking and equal differences between scale values, but also have zero as true point of origin. Measurement of money is good example. $4 is 4 times greater than 0 with no purchasing power.
List the Measurement Scales from least to most refined
Nominal - Ordinal - Interval - Ratio
What is a parameter?
Measure used to describe a characteristic of a population. Many exist, but investment analysts typically utilize a few.
What is a sample statistic?
As parameter is to population, sample statistic is the same for a sample. Measure used to describe a characteristic of a sample.
What is a frequency distribution?
Tabular presentation of statistical data that aids the analysis of large data sets. Summarize statistical data by assigning it to specified groups, or intervals.
How do you build a frequency distribution?
Step 1: Define the intervals - define a set of values that an observation may take on. Intervals must be mutually exclusive.
Step 2: Tally the observations - assign observations to the defined intervals
Step 3: Count the observations - count the frequency, which is the actual number of observations that fall within a given interval.
What is the modal interval?
For any frequency distribution, the interval with the greatest frequency is referred to as the modal interval.
What is relative frequency? What is cumulative relative frequency?
Percentage of total observations falling within each interval. Cumulative frequency is summing the absolute relative frequencies starting at the lowest level.
