Chapter 6 Summary

Key Concepts Summary

  • 6.1 Descriptive Statistics

    • Differentiating Population and Sample
    • Differentiating Quantitative and Continuous variables
  • 6.2 Frequency Distribution and Histograms

    • Creating and interpreting frequency tables
    • Displaying, analyzing, and interpreting data in histograms
  • 6.3 Descriptive Measures
    • Calculating the Measures of Center and Measures of Dispersion for sets of data
  • 6.4 Skewness
    • Identifying the shape of a data set
  • 6.5 Measures of Location
    • Recognize, describe, calculate, and interpret the measures of location of data: quartiles and percentiles.
  • 6.6 Graphical Representation
    • Using graphs and charts to visualize data

Glossary of Terms

Central Limit Theorem. A theorem stating that as a sample size increases the sample mean will grow closer to normal.

Continuous Variable. A variable with an infinite number of possible values.

Frequency or relative frequency. (or percent frequency or probability).

Histogram. A visual display of a frequency chart.

Measures of Center. Measurements used to determine the center of data.

Measures of Dispersion. Measurements used to determine the spread of data.

Median. A number that measures the “center” of the data.

Normal Distribution. A “bell-shaped” symmetric distribution of data that can be used for estimating probabilities and proportions within a population.

Percentiles. Numbers that separate the (ordered) data into hundredths.

Population. A group to be studied.

Quantitative variable. A variable with a finite and countable number of possible values.

Quartiles. Numbers that separate the data into quarters.

Sample. A selection from the population.

Skew. A term to describe a curve that does not meet the criteria of a normal distribution.

Variable. The characteristics to be studied from the population and/or sample.

Formula & Symbol Hub

Symbols Used

  • [latex]\mu[/latex] = Population Mean
  • [latex]\bar{x}[/latex] = Sample Mean
  • [latex]σ^2[/latex] = Population Variance
  • [latex]s^2[/latex] = Sample Variance
  • [latex]\sigma[/latex] = Population standard deviation
  • [latex]s[/latex] = Sample standard deviation
  • [latex]s_{\bar{x}}[/latex] = Standard error of the means
  • [latex]z[/latex] = a Z-score

Formulas Used

  • Formula 6.1 – Population Mean

[latex]\begin{align*}\mu&=\frac{\sum x_i}{N}\end{align*}[/latex]

  • Formula 6.2 – Sample mean

[latex]\begin{align*}\bar{x}&=\frac{\sum x_i}{n}\end{align*}[/latex]

  • Formula 6.3 – Population Variance

[latex]\begin{align*}\sigma^2=\frac{\sum\left(x_i-\mu\right)^2}{N}\end{align*}[/latex]

  • Formula 6.4 – Sample Variance

[latex]\begin{align*}s^2=\frac{\sum\left(x_i-\bar{x}\right)^2}{n-1}=\frac{\Sigma x_i^2-\frac{\left(\sum x_i\right)^2}{n}}{n-1}\end{align*}[/latex]

  • Formula 6.5 – Population Standard Deviation

[latex]\sigma=\sqrt{\sigma^2}[/latex]

  • Formula 6.6 – Sample Standard Deviation

[latex]s=\sqrt{s^2}[/latex]

  • Formula 6.7 – Standard Error of the Means

[latex]\begin{align*}s_{\bar{x}}=\sqrt{\frac{s^2}{n}}=\frac{s}{\sqrt{n}}\end{align*}[/latex]

  • Formula 6.8 – Coefficient of Variation (Population)

[latex]\begin{align*}CV=\frac{\sigma}{\mu}\times 100\end{align*}[/latex]

  • Formula 6.9 – Coefficient of Variation (Sample)

[latex]\begin{align*}CV=\frac{s}{\bar{x}}\times 100\end{align*}[/latex]

  • Formula 6.10 – Interquartile Range
[latex]\displaystyle{IQR = Q_3 – Q_1}[/latex]

License

Icon for the Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License

Mathematics of Finance Copyright © 2024 by Sharon Wang is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.

Share This Book