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Introduction To Statistics
Introduction To Statistics
STATISTICS AND
DESCRIPTIVE STATISTICS
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LECTURE GOALS
After completing this lecture, you should be able to:
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POPULATIONS and SAMPLES
Mean Range
Standard Deviation
Coefficient of
Variation 4
MEAN (ARITHMETIC AVERAGE)
The Mean is the arithmetic average of
data values
N = Population Size
Population mean
N
xx1 x2 x N
i
i 1
N N
n = Sample Size
n
Sample mean x i
x1 x2 xn
x i 1
n n
5
MEAN (ARITHMETIC AVERAGE)
The most common measure of central tendency
Mean = sum of values divided by the number of
values
Affected by extreme values (outliers)
= 19.17
6
MEDIAN
In an ordered array, the median is the
“middle” number, i.e., the number that splits
the distribution in half
The median is not affected by extreme
values (outliers)
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For example, a set of data is given below:
10 5 19 8 3
First, we rank the given data in an increasing
order as follows:
3 5 8 10 19
There are five observations in the data set.
Consequently, n = 5 and
Median is 8
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MODE
The value that occurs most often
Not affected by extreme values
There may be no mode
There may be several modes
9
For example, 2 sets of data are given as
follows:
77 69 74 81 71 68 74 73
Mode = 74
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SHAPE OF A DISTRIBUTION
Describes how data is distributed
Symmetric or skewed
12
Measures of Variation
Variation
Sample Sample
Variance Standard
Deviation
13
Variation
Example:
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14
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Disadvantages of the Range
Ignores the way in which data are distributed
7 8 9 10 11 12 7 8 9 10 11 12
Sensitive to outliers
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,5
1,1,1,1,1,1,1,1,1,1,1,2,2,2,2,2,2,2,2,3,3,3,3,4,120
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Interquartile Range
Difference between the 3rd quarter and
1st quarter of the data
Interquartile range = 3rd quartile – 1st quartile
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Find the Inter Quartile Range
Sample Data in Ordered Array: 11 12 13 16 16 17 18 21 22
*make sure the data is ranked in an increasing order
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VARIANCE
Population variance:
N
i
(x μ) 2
σ2 i 1
N
n
Sample variance: (x i x) 2
s2 i1
n -1
19
STANDARD DEVIATION
x x
N 2 2
2
σ σ
i
(x μ) 2
OR
N
i 1 N
N
Sample standard deviation:
s
2
n
(x i x ) 2
OR
1 x 2
s i 1
s
n 1 x
2
n
n -1
20
Calculation Example:
Sample Standard Deviation
Sample Data (Xi) : 48.50 38.40 65.50
22.60 79.80 54.60
x x²
48.50 2352.25
38.40 1474.56
65.50 4290.25
22.60 510.76
79.80 6368.04
54.60 2981.16
∑x = 309.40 ∑x² = 17,977.02
2
1 x 1 (309.40) 2
s
n 1
x
2
n
17,977.02
6 1 6
20.11
Coefficient of Variation
Population Sample
σ s
CV
μ
100% CV
x 100%
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Comparing Coefficients of Variation
Stock A:
Average price last year = $50 CV = ($5/$50) . 100%
Standard deviation = $5
= 10%
Stock B:
Average price last year = $100
CV = ($5/$100) . 100%
Standard deviation = $5
= 5%
23
Both stocks have the same standard
deviation, but stock B is less variable
relative to its price, i.e. the price for stock
B is less volatile than stock A.
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