BUSINESS

STATISTICS
ASSIGNMENT

SUBMITTED BY: ADITYA AGRAWAL

SUBMITTED TO: DEEPIKA MAAM 01

Central Tendency
DEFINITION
The Central Tendency may be defined as
the tendency of a given set of
observations to cluster around a single
central or middle value and the single
value that represents the given set of
observations

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 DIFFERENT MEASURES OF
CENTRAL TENDENCY

ARITHMETIC MEAN MEDIAN MODE

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ARITHMETIC MEAN

Calculation of arithmetic mean-individual

observations : X = X1 + X2 + … + Xn = Σx/ n

Short-cut method: X = A + Σd/ n

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Calculation of arithmetic
mean discrete series
In the case continuous series, the arithmetic
mean may be computed by applying any of
the following methods :
DIRECT METHOD

SHORT-CUT METHOD

STEP-DEVIATION METHOD

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DIRECT METHOD
X = F1X1 + F2X2 + ... + FN XN = ΣFX = ΣFX

F1 + F2 + ... + FN ΣF N

SHORT- CUT METHOD

X=A+ ΣD/N

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STEP-DEVIATION METHOD

U= X +A/H

X = A + ΣFU X H

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WEIGHTED ARITHMETIC
MEAN
X = ΣwX/ Σw
MEDIAN
CALCULATION OF MEDIAN – INDIVIDUAL OBSERVATION

WHEN N IS ODD = [N + 1] TH /22.

WHEN N IS EVEN = [N\2]TH AND [N\2+1]

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 PREPARE THE ‘LESS THAN’ CUMULATIVE
FREQUENCY (C.F.) DISTRIBUTION.

FIND N + 1
CALCULATION ———-
2
OF MEDIAN -
DISCRETE SERIES SEE THE C.F. JUST GREATER THAN OR
EQUAL TO N + 1
———-
2

THE VALUE OF THE VARIABLE

CORRESPONDING TO THE C.F. OBTAINED IN
STEP 3 GIVES THE REQUIRED MEDIAN.
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 PREPARE THE ‘LESS THAN’ CUMULATIVE
FREQUENCY (C.F.) DISTRIBUTION.

FIND N + 1
CALCULATION ———-

OF MEDIAN - 2

CONTINUOUS SEE THE C.F. JUST GREATER THAN OR

EQUAL TO N + 1
SERIES ———-
2
THE VALUE OF THE VARIABLE
CORRESPONDING TO THE C.F. OBTAINED IN
STEP 3 GIVES THE REQUIRED MEDIAN

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APPLY THE FOLLOWING INTERPOLATION FORMULA FOR CALCULATION THE
MEDIAN.
MEDIAN = L + N/2- C X H
————
F

WHERE, L = LOWER LIMIT OF THE MEDIAN-

CLASS, C.F. = CUMULATIVE FREQUENCY OF

THE CLASS PRECEDING THE MEDIAN CLASS,

F = FREQUENCY OF THE MEDIAN CLASS,

H = MAGNITUDE OF THE MEDIAN CLASS

INTERVAL.

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 MODE
Calculation of continuous frequency distribution mode = l + f1 + f0 x h

2f1 -f0–f2
l= lower limit of the modal class

F1 = frequency of the model class ,

F0 = the frequency of the class preceding the modal class

F2 = the frequency of the class succeeding the modal class

H = size of model class

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Dispersion

The term dispersion is used to indicate the

facts that within a given group the items
differ form one another in size or in other
words, there is lack of uniformity in their
size.

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Dispersion is a statistical term that describes the size of the
distribution of values expected for a particular variable and can be
measured by several different statistics, such as range, variance, and
standard deviation. In finance and investing, dispersion usually refers
to the range of possible returns on an investment. It can also be used
to measure the risk inherent in a particular security or investment
portfolio.
• Dispersion refers to the range of potential outcomes of investments
based on historical volatility or returns.
• Dispersion can be measured using alpha and beta, which measure
risk adjusted returns and returns relative to a benchmark index,
respectively.
• Generally speaking, the higher the dispersion, the riskier an
investment is, and vice versa.
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Range
Measures of
Dispersion
Quartile Deviation

Average Deviation

Standard deviation and

coefficient of variation .
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Range
It is the simplest method of studying
dispersion. Range is the difference
between the smallest value and the largest
value of a series. Absolute = L – S
Coefficient of range = L – S
L–S

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Quartile Deviation
The concept of 'Quartile Deviation' does
take into account only the values of the
'Upper quartile' (Q3 ) and the 'Lower
quartile' (Q1 ).
1. Inter-quartile range = Q – Q
2. Semi- quartile range = Q – Q
2
3. Coefficient of quartile Deviation = Q3 – Q1
Q3 – Q1
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Mean Deviation/Average
Deviation
Average deviation is defined as a value,
which is obtained by taking the average of
the deviations of various items, from a
measure of central tendency, Mean or
Median or Mode, after ignoring negative
signs.

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Computation in case of
raw data
ABSOLUTE AVG. DEVIATION ABOUT MEAN OR MODE OR MEDIAN = Σ |D|

N
WHERE N= NO. OF OBSERVATIONS
|D| = DEVIATIONS TAKEN FROM MEAN/MEDIAN/MODE IRRESPECTIVE OF THEIR SIGNS.

COEFFICIENT OF A.D. = AVERAGE DEVIATION FROM MEAN/ MODE OR MEDIAN

MEAN OR MEDIAN OR MODE

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Standard Deviation
Standard deviation is calculated as the
square root of average of squared
deviations taken from actual mean. It is
also called root mean square deviation.
The square of standard deviation i.e. o 2
is called 'variance’.

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When the actual values
are given :

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Properties of Arithmetic
Mean
THE SUM OF DEVIATIONS OF THE ITEMS FROM THEIR ARITHMETIC
MEAN IS ALWAYS ZERO, I.E ∑(X – X) = 0.

THE SUM OF THE SQUARED DEVIATIONS OF THE ITEMS FROM ARITHMETIC

MEAN (A.M) IS MINIMUM, WHICH IS LESS THAN THE SUM OF THE
SQUARED DEVIATIONS OF THE ITEMS FROM ANY OTHER VALUES.

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 IF EACH ITEM IN THE ARITHMETIC SERIES IS SUBSTITUTED BY THE MEAN,
THEN THE SUM OF THESE REPLACEMENTS WILL BE EQUAL TO THE SUM OF
THE SPECIFIC ITEMS.

IF THERE ARE TWO GROUPS CONTAINING N1 AND N2 OBSERVATIONS X̄ 1 AND X2̄ ARE THE
RESPECTIVE ARITHMETIC MEANS, THEN THE COMBINED ARITHMETIC MEAN IS GIVEN BY X̄
= (N1X1̄ + N2X2̄ ) / (N1 + N2)THIS PROPERTY COULD BE EXTENDED TO MORE THAN TWO
GROUPS AND WE MAY WRITE IT AS X̄ = ∑NX̄ /∑N

IF EACH OBSERVATION OF A DATA IS MULTIPLIED BY A CONSTANT K,

THEN THE EARTH ARITHMETIC MEAN OF THE DATA OBTAINED ALSO GETS
MULTIPLIED BY IT
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Thank You.