R8: Statistical Concepts And Market Returns Flashcards
LOS
a. distinguish between descriptive statistics and inferential statistics, between a population and a sample, and among the types of measurement scales;
b. define a parameter, a sample statistic, and a frequency distribution;
c. calculate and interpret relative frequencies and cumulative relative frequencies, given a frequency distribution;
d. describe the properties of a data set presented as a histogram or a frequency polygon;
e. calculate and interpret measures of central tendency, including the population mean, sample mean, arithmetic mean, weighted average or mean, geometric mean, harmonic mean, median, and mode;
f. calculate and interpret quartiles, quintiles, deciles, and percentiles;
g. calculate and interpret 1) a range and a mean absolute deviation and 2) the variance and standard deviation of a population and of a sample;
h. calculate and interpret the proportion of observations falling within a specified number of standard deviations of the mean using Chebyshev’s inequality;
i. calculate and interpret the coefficient of variation and the Sharpe ratio;
j. explain skewness and the meaning of a positively or negatively skewed return distribution;
k. describe the relative locations of the mean, median, and mode for a unimodal, nonsymmetrical distribution;
l. explain measures of sample skewness and kurtosis;
m. compare the use of arithmetic and geometric means when analyzing investment returns.
(a1) Descriptive Statistics is…
The study of how data can be summarized effectively to describe important aspects of large data sets
(a2) Statistical Inference involves…
making forecasts, estimates, or judgments about a larger group from the smaller group actually observed
(a3) Population is…
defined as all members of a specified group.
(a4) Sample is…
a subset of population
(a5) Types of Measurement Scales, hint: NOIR
Nominal Scales: categorize data, no rank
Ordinal Scales: categorize data, with rank
Interval Scales: categorize with rank, equal difference
Ratio Scales: categorize with rank, equal difference, true zero point
(b1) Parameter is…
any descriptive measure of a population characteristic
(b2) Sample statistic or statistic is…
a quantity from or used to describe a sample
(b3) Frequency distribution is…
a tabular display of data summarized into a relatively small number of intervals
(b4) Construction of Frequency Distribution includes:
Sort data in ascend - calculate range - decide number of intervals (k) - determine interval width (Range/k) - divide intervals - count observations in each interval - construct table
(c1) Relative Frequency is…
observation of each interval/total of observations
(c2) Cumulative Relative Frequency is…
cumulation of relative frequency from first to last
(e1) Arithmetic mean is…
the sum of the observation divided by the number of observations
(e2) Population mean is…
arithmetic mean value of a population
(e3) Sample mean is…
arithmetic mean value of a sample
