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VARIATION
RANGE:
PERCENTILES AND QUARTILES:Q1 INTERQUARTILE RANGE: Q3 Q1 BOX AND WHISKER PLOTS
2
(x x )
n 1
Examples:
Standard Deviation of Income Distribution Explorer Defining the Risk factor using standard deviation
Two mutual funds in dollars: Fund A: 8.3, -6.2, 20.9, -2.7, 33.6, 42.9, 24.4, 5.2, 3.1, 30.05 x = 16, s = 16.74 Fund B: 12.1, -2.8, 6.4, 12.2, 27.8, 25.3, 18.2, 10.7, -1.3, 11.4 x = 12, s = 9.969. Which is riskier?
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Two mutual funds in dollars: Fund A: 8.3, -6.2, 20.9, -2.7, 33.6, 42.9, 24.4, 5.2, 3.1, 30.05 x = 16, s = 16.74 Fund B: 12.1, -2.8, 6.4, 12.2, 27.8, 25.3, 18.2, 10.7, -1.3, 11.4 x = 12, s = 9.969. Which is riskier? Defining the Risk factor using standard deviation
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Examples:
Standard Deviation of Income Distribution http://wbln0018.worldbank.org/psd/compet e.nsf/66ce914fdee59ef585256490006019d1 ?OpenView
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Unimodal Distributions
Skewness: extent of departure from symmetry: a3 = 0 is symmetrical 1 1
a3 = n
3 ( x x )
3 f ( m x )
s3
Kurtosis: extent of peakedness of a bellshaped distribution in comparison to the normal distribution: a4 = 4.00 for a normal 1 curve 4 ( x x) 4 1
a4 =
f (m x ) n s
4
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Coefficient of Variation
a set of measurements standard deviation divided by the mean value CV = s/x a proportionate measure of variation
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Z-scores
The distance between a measurement and its mean in standard deviation units
xx z s or z x
Example:
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Chebyshevs Theorem
applies to any smoothed distribution or histogram
the percentage of the total area under any smoothed distribution is at least 100(1-1/k2)% (k standard deviations) (x 2s, x + 2s) contains at least 75% of the measurements (x 3s, x +3s) contains at least 89% of the measurements
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Z-Score Problems:
1. Scores on intelligence tests (IQs) are normally distributed in children. IQs from the Wechsler intelligence tests are known to have means of 100 and standard deviations of 15. In almost all the states in the United States (Pennsylvania and Nebraska are exceptions) children can be labeled as mentally retarded if their IQ falls to 70 points or below. What is the maximum z score one could obtain on an intelligence test and still be considered to be mentally retarded? 2. If gifted children need IQs of 130 and above, what is the minimum z score on an intelligence test that 28 a gifted child can obtain?
5. What percentage of the children would be thought to be retarded? 6. What percentage of the children would be expected to be gifted in the typical school system?
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Answers #3 & 4: The percentage of children who are neither retarded or gifted and have IQs between 2 z would equal 95% using the empirical rule.
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Answer #5: Given a normal distribution, you know that 50% of the children have IQs below the mean. If 95% of the children have IQs between 2 z, then half that percentage (the curve is symmetrical) would be below the mean and a 2 z. Half of 95% is 47.5%. Thus the percentage of children thought to be retarded would be 50% - 47.5% = 2.5%. The 31 Figure illustrates the answer to this problem.
Answer #6: This is really the same problem as Question 2, except you are dealing with the upper tail in the normal distribution. The answer is the same, 2.5%, and the Figure on the left illustrates this solution.
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MEASURES OF SPREAD
Variance Standard Deviation Z-Score Chebyshev and Empirical Rules
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Exercises:
p. 99 # 3.37 p. 107 # 3.55
Homework: pp. 110 116 # 5, 7, 9, 11, 13, 17, 19
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