07-Statistics Review

07-Statistics Review - Class Business Current Events...

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Class Business Current Events Upcoming Case Formulas Mean/Expected Value, E[R] Variance, Var[R] Standard Deviation, SD[R] S s s s R p R E 1 ] [ ] [ ] [ R Var R SD S s R E R p R Var s s 1 2 ]) [ ( ] [
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Modeling Uncertainty Probability Density Function Can use a histogram to get a feel for how data is distributed – Use histogram function in ‘data analysis’ add-in Then find a density function that matches the data – Normal – Lognormal – Others We’ll focus on the normal distribution The Normal Distribution A particular bell shaped curve. Always the same shape , but possibly different locations (expected values) and scales (standard deviations).
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The Normal Distribution A normal distribution is completely characterized by its mean and variance (or standard deviation). A standard normal has a mean of zero and a variance of one (so the SD is also one). There is about a 95% probability that a normally distributed random number will be within two standard deviations of its mean. Operationalize the Normality Assumption We need the mean/expected value and the standard deviation to make use of normal distribution In most cases we will not know these values, so we will have to obtain estimates .
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07-Statistics Review - Class Business Current Events...

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