Vol. 1 LM2 Data Visualization

Question 1

Benefit

word cloud

Data Visualization

Answer 1

allows us to quickly perceive the most frequent terms among the given text to provide information about the nature of the text

Question 2

identify data visualization

a chart to depict the frequency of unstructured data—particularly, textual data

Data Visualization

Answer 2

word cloud

Question 3

identify data visualization

it consists of a set of colored rectangles to represent distinct group, and the area of each rectangle is proportional to the value of the corresponding group

Data Visualization

Answer 3

tree-map

Question 4

identify data visualizaton

alternative form for presenting the joint frequency distribution of two categorical variables

Data Visualization

Answer 4

stacked bar chart

Question 5

identify data visualizaton

two categorical variables

Data Visualization

Answer 5

• enhanced version of the bar chart, grouped bar chart
• also known as a clustered bar

Question 6

Concept

The frequency distribution of categorical data can be plottetd in this type of graph

Data Visualization

Answer 6

bar chart

Question 7

Describe

line chart

Data Visualization

Answer 7

• is a type of graph used to visualize ordered observation
• a line chart is often used to display the change of data servies over time

Question 8

identify data visualization

a type of graphy for visualizing the joint variation in two numerical variables

Data Visualization

Answer 8

scatter plot

Question 9

identify data visualization

is a useful tool for organizing scatter plots between pairs of variables, making it easy to inspect all pairwise relationships in one combined visual

Data Visualization

Answer 9

scatter plot matrix

Question 10

Identify data visualization

is a type of graphic that organizes and summarizes data in a tabular gormat and represents them using a color spectrum

Data Visualization

Answer 10

heat map

Question 11

Evaluating data visuals

You are examining a scatter plot of monthly stock returns, similar to the one in Exhibit 31, for two technology companies: one is a hardware manufac- turer, and the other is a software developer. The scatter plot shows a strong positive association among their returns.

Describe what other information the scatter plot can provide.

Data Visualization

Answer 11

Besides the sign and degree of association of the stocks’ returns, the scatter plot can provide a visual representation of whether the association is linear or non-linear, the maximum and minimum values for the return observations, and an indication of which observations may have extreme values (i.e., are potential outliers).

Question 12

What to explore or present

questions: explore comparison

Data Visualization

Answer 12

comparison among categories vs. over time

Question 13

What to explore or present

explore comparison: among categories

Data Visualization

Answer 13

• bar chart
• tree map
• heat map

Question 14

What to explore or present

explore comparison: over time

Data Visualization

Answer 14

• line chart (two variables)
• bubble line chart (three variables)

Question 15

What to explore or present

question: explore distribution

Data Visualization

Answer 15

is the distribution over:
* numerical data
* categorical data
* unstructured data

Question 16

What to explore or present

explore distribution: numerical data

Data Visualization

Answer 16

• histogram
• frequency polygon
• cumulative distribution chart

Question 17

What to explore or present

explore distribution: categorical data

Data Visualization

Answer 17

• bar chart
• tree map
• heat map

Question 18

What to explore or present

explore distribution: unstructured data

Data Visualization

Answer 18

word cloud

Question 19

What to explore or present

present a relationship

Data Visualization

p. 98

Answer 19

• scatter plot
• scatter plot matrix
• heat map

Question 20

Selecting visualization types

Explain which type of chart can best provide a quick view of trading volume for the given period.

A portfolio manager plans to buy several stocks traded on a small emerging market exchange but is concerned whether the market can provide sufficient liquidity to support her purchase order size. As the first step, she wants to analyze the daily trading volumes of one of these stocks over the past five years.

P. 99

Answer 20

The five-year history of daily trading volumes contains a large amount of numerical data. Therefore, a histogram is the best chart for grouping these data into frequency distribution bins and for showing a quick snapshot of the shape, center, and spread of the data’s distribution.

Question 21

Selecting visualization types

An analyst is building a model to predict stock market downturns. Accord- ing to the academic literature and his practitioner knowledge and expertise, he has selected 10 variables as potential predictors. Before continuing to construct the model, the analyst would like to get a sense of how closely these variables are associated with the broad stock market index and wheth- er any pair of variables are associated with each other.

P. 99

Answer 21

To inspect for a potential relationship between two variables, a scatter plot is a good choice. But with 10 variables, plotting individual scatter plots is not an efficient approach. Instead, utilizing a scatter plot matrix would give the analyst a good overview in one comprehensive visual of all the pairwise associations between the variables.

Question 22

Selecting visualization types

Central Bank members meet regularly to assess the economy and decide on any interest rate changes. Minutes of their meetings are published on the Central Bank’s website. A quantitative researcher wants to analyze the meeting minutes for use in building a model to predict future economic growth.

p. 99

Answer 22

Since the meeting minutes consist of textual data, a word cloud would be the most suitable tool to visualize the textual data and facilitate the researcher’s understanding of the topic of the text as well as the sentiment, positive or negative, it may convey.