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### How Businesses Use Regression Analysis Statistics

Regression analysis is a statistical tool used for the investigation of relationships between variables. Usually, the investigator seeks to ascertain the causal effect of one variable upon another — the [more…]

### Random Variables and Probability Distributions in Business Statistics

Random variables and probability distributions are two of the most important concepts in statistics. A *random variable*assigns unique numerical values to the outcomes of a [more…]

### Explore Hypothesis Testing in Business Statistics

In statistics, *h**ypothesis testing* refers to the process of choosing between competing hypotheses about a probability distribution, based on observed data from the distribution. It's a core topic and a [more…]

### 3 Ways to Describe Populations and Samples in Business Statistics

When you're working with populations and samples (a subset of a population) in business statistics, you can use three common types of measures to describe the data set: central tendency, dispersion, and [more…]

### Understand Sampling Distributions in Business Statistics

In statistics, sampling distributions are the probability distributions of any given statistic based on a random sample, and are important because they provide a major simplification on the route to statistical [more…]

### Business Statistics For Dummies Cheat Sheet

Statistics make it possible to analyze real-world business problems with actual data so that you can determine if a marketing strategy is really working, how much a company should charge for its products [more…]

### Business Statistics: Use Regression Analysis to Determine Validity of Relationships

Regression analysis is one of the most important statistical techniques for business applications. It's a statistical methodology that helps estimate the strength and direction of the relationship between [more…]

### Business Statistics: Modeling Asset Returns with Normal Distribution

*M**arket participants* — equity analysts, risk managers, portfolio managers, traders, and economists — must be able to accurately measure and model the risk and return of financial assets. As a starting point [more…]

### Business Statistics: Assess Financial Risk with the VaR Methodology

In the field of risk management, you can measure the risk of a portfolio with the *Value at Risk (VaR) methodology*. The standard VaR model (known as the [more…]

### Applying Hypothesis Testing in Business Statistics

Hypothesis testing isn't just for population means and standard deviations. You can use this procedure to test many different kinds of propositions. For example, a jury trial can be seen as a hypothesis [more…]

### Business Statistics: Is Forecasting Market Prices Truly Achievable?

Depending on your school of thought, forecasting market prices can be either a waste of time or the key to financial success. Either way, knowing about each camp is useful as you learn about business statistics [more…]

### Determine the Relationship between Variables Using Covariance and Correlation

You can determine the relationship between two variables with two measures of *association*: covariance and correlation. For example, if an investor wants to understand the risk of a portfolio of stocks, [more…]

### Draw Conclusions about a Population Using Confidence Intervals and Hypothesis Testing

When drawing conclusions about a population from randomly chosen samples (a process called *statistical inference*), you can use two methods: confidence intervals and hypothesis testing. [more…]

### How to Calculate the Relative Frequency of a Class

A frequency distribution shows the number of elements in a data set that belong to each class. In a *relative frequency distribution*, the value assigned to each class is the [more…]

### How to Find the Cumulative Frequency of a Class and All Prior Classes

*Cumulative frequency* refers to the total frequency of a given class and all prior classes in a graph. For example, say that you have researched the price of gas at several gas stations in your area, and [more…]

### How to Find the Weighted Arithmetic Mean of a Data Set

Sometimes a data set contains a large number of repeated values. In these situations, you can simplify the process of computing the mean by using *weights* [more…]

### How to Find the Weighted Geometric Mean of a Data Set

When a data set contains a large number of repeated values, you can simplify the process of computing the mean by using *weights* — the frequencies of a value in a sample or a population. You can then compute [more…]

### How to Locate a Value in a Data Set Using Quartiles

*Quartiles* split up a data set into four equal parts, each consisting of 25 percent of the sorted values in the data set. Quartiles are related to percentiles like so: [more…]

### How to Use Relative Variation to Find the Uncertainty Associated with a Data Set

*Relative variation* refers to the spread of a sample or a population as a proportion of the mean. Relative variation is useful because it can be expressed as a percentage, and is independent of the units [more…]

### How to Measure the Covariance and Correlation of Data Samples

When comparing data samples from different populations, two of the most popular measures of association are *covariance* and *correlation*. Covariance and correlation show that variables can have a positive [more…]

### The Difference between Mutually Exclusive and Independent Events

An *event* is one possible outcome of a random experiment. Events may sometimes be related to each other. Two key ways in which events may be related are known as mutually exclusive and independent. [more…]

### How to Find Unconditional, or Marginal, Probabilities

An *unconditional,* or *marginal, probability* is one where the events (possible outcomes) are independent of each other. When you create a *joint probability table* [more…]

### How to Compute Probabilities Using the Addition Rule

You use the addition rule to compute the probability of the union of two events. Mathematically speaking, for events *A*and *B*, the addition rule states that [more…]

### How to Compute Probabilities by Following the Complement Rule

Two events are said to be complements if they are mutually exclusive *and* their union equals the entire sample space. This is represented by the complement rule, which is expressed as follows: [more…]

### How to Use Combinations to Factor Binomial Probabilities

In the binomial formula, you use the combinations formula to count the number of *combinations* that can be created when choosing *x* objects from a set of [more…]