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Median:the value in the middle when the data items are arranged in ascending order,divides the
numbers into two halves such that the number of items below is the same as the number of items
above it
Odd number of items:median value in the middle
Even number: median value of the two middle items
Merits:widely used measure of central tendency,not influenced by extreme values
Demerits:when the number of items are small median may not be representative because it is a
positia? average,median is appropriate when distribution is highly skewed
Mode:value that occurs with greatest frequency,most frequent value in the set of numbers
Biomodal:data with exactly two modes
Percentile: provides information about how the data are spread over the interval from the smallest
value to the largest value
pth percetile:value such that at least p percent of the items take on this value or less,and at least
(100-p) percent of the items take on this value
Quartiles:specific percentiles
first quartile-25th percentile
second quartile-50th percentile (median)
third quartile-75th percentile
Range:the difference between the largest and smallest data value,the simpliest measure of
variability
Merits:simple to compute and understand,gives quick answer
Demerits:not reliable because it's affected by the extreme items,too indefinite for usage
Midrange:the arithmetic mean of the max. and min. values in a data set,measure of central tendency
Interquartile range:the difference between the third quartile and the first quartile,not affected by
the extreme values
Midhinge:the arithmetic mean of the first quartile and the third quartile,not affected by extreme
values
Variance:a measure of variability that utilizes the data,the average of the squared differences
between each data value and the mean
Standard deviation-the positive square root of the variance,small SD ->high degree of uniformity of
observation
Coefficient of variation:indicated how large the standard deviation is in relation to the
mean,measure of relative dispersion,used to compare two or more graphs,weakness:undefined if the
mean is zero or data is negative
Merits:rigidly defined,definite value,widely used and most appropriate method for comparing the
variability
Demerits:not easy to understand,difficult to calculate
Z-score:often called the standardized value,it denotes the number of standard deviation
Negative:less than zero - data value less than sample mean
Positive:greater than zero-data value greater than the sample mean
Coefficient of quartile deviation:indicates how large the deviction is in relation to the median
Merits:easy to calculate,simple to understand
Demerits:not based on all observations,affected by fluctuations,necessary to arrange data in
ascending order
Chebyshev's theorem:permits us to make statements about the percentage of items that must be
within a specific number of standard deviatons from the mean
Empirical rule:used for dara having a bell-shaped distribution to determine the percentage of items
that must be within a specified number of standard deviations of the mean
Time series:a sequence of observation obtained over time,observations are taken at equally spaced
time intervals:yearly,quarterly,monthly,...
-can be decomposed into components:trend,seasonal,cycle,irregular
goals:modeling,characterization,forecasting
can be Stock-values at the point of time,Flow-values over a given period
Index number:number that expresses changes in a variable or group of variable with respect to
time,geographic location or other characteristics such as income,proffesion..
Composite index numbers:a number that reflects an average relative changes in a group of vriables
compared to a base,the present perriod is called current period,and is offten presented like a
symbol,period in the past is called the base period
Most common used Composite index numbers:
1.Price index numbers
2.Quantity index number
3.Value index number
Aggregate price index:could be obtained by simply summing the pricesof several items or calculating
average of the prices
Laspeyres method
Merits:easy to calculate,has an intuitive meaning,changes in the index number can be explained by
changes in the price
Demerits:tends to overstate inflation,no substition in terms of economic theory is allowed
Paasche's method
Merits:the weights are continously updated and always reflect current buying habits
Demerits:quantity data for current ear needed,prices have to be recomputed each year
Fisher's ideal index number:the geometric mean of the Laspeyres and Paasche's indeces,not widely
used because of it's limitations
Merits:uses geometric mean-the best average for the construction of index numbers
Demerits:Practical limitation of collecting data,it's not easy to enusage what it refers to
Forecasting:the underlying premise of time series models is that the historical pattern of the
dependent variable could be used as the basis for developing forecasts
Types of forecating models:nave model,moving average model
Forecasting errors:MAPE (mean absolute percentage error),MSE(mean squared error),ROOT
MSE(root mean squared error)
Naive model forecasting:assumes that things will remain the same and that whetever happened last
time will happen again this time,simple and efficient model
Moving average forecasting:The average of the previous observations of time series,reduces radnom
variation and ignores complex relationships in data,useful in relatively stable series without seasonal
component
Simple linear regresion model:equation that describes how y (as an dependent variable) is related to
x and an error term
Least squares method:a procedure for using sample data to find the estimated regression equation
Coefficient of determination:the proportion of the total variation in the dependent variable that is
explained or accounted for by the variation in the independent variable,it ranges from 0 to 1 and it's
the square og coef. of correlation