Week One Discussion Questions
• How may variance and standard deviation be applied to a real-world business-related problem? Provide a specific application in which these measures are useful.
Standard deviation measures the spreading of the numbers. Variance measures the statistic dispersion or average of the squared differences from the mean. Mean is a way to describe the location of a distribution. Variance also measures the degree of the number being spread out. Standard deviation is a positive square root of the variance. The higher standard deviation, the more spreading of the data would be over a large range of values. Both variance and standard deviation could be applied in finance, weather, study of sports, shoes, etc. In finance the standard deviation would be used to measure the risks involved in the investments such as stocks, bonds, property, securities, portfolio, mutual funds, etc.
• When would you use descriptive over inferential statistics? Provide a specific scenario and explain your rationale.
Descriptive Statistics is a branch of statistics dealing with summarization and description of collections of data—data sets, including the concepts of arithmetic mean while Statistical inference or statistical induction comprises the use of statistics and random sampling to make inferences concerning some unknown aspect of a population. It is distinguished from descriptive statistics.
Descriptive Statistics is used when describing certain aspects of an immediate group within the population. For example, we may want to describe a math class and compare it to a class of science. Things that we may want to use for comparison would be age, gender, and even math skills. Descriptive statistics would allow us to analyze all those different areas and provide a comparison to view similarities, differences and ratios. Before any study is to be observed certain factors would have to be ascertained such as specific measurements for math skills....