SPFA01-6 Formula Sheet

Measures of location

∑ 𝑥𝑖
Mean: 𝑥̅ = 𝑛

(𝑛+1)
Position of quartile: Quartile number × 4

Measures of dispersion and skewness

∑(𝑥𝑖 −𝑥̅ )2 ∑ 𝑥𝑖2 −𝑛𝑥̅ 2

Variance: 𝑠 2 = 𝑛−1
or 𝑠 2 = 𝑛−1

∑(𝑥𝑖 −𝑥̅ )2
Standard deviation: 𝑠 = √ 𝑛−1

𝑛∑(𝑥 −𝑥̅ )3 3(Mean-Median)

Pearson’s coefficient of skewness: 𝑆𝑘𝑝 = (𝑛−1)(𝑛−2)𝑠
𝑖
3 ≈ standard deviation

Probability concepts

P(A ∩ B)
Conditional probability: P(A | B) =
P(B)

Addition rule
• Non-mutually exclusive events: P(A ∪ B) = P(A) + P(B) - P(A ∩ B)
• Mutually exclusive events: P(A ∪ B) = P(A) + P(B)

Multiplication rule
• Statistically dependent events: P(A ∩ B) = P(A | B) × P(B)
• Statistically independent events: P(A ∩ B) = P(A) × P(B)

𝑛!
Permutation: 𝑛P𝑟 = (𝑛−𝑟)!

𝑛!
Combination: 𝑛C𝑟 =
𝑟!(𝑛−𝑟)!

© Milpark Education Statistical Principles for Financial Analysis SPFA01-6 Formula Sheet 2023
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Probability distributions

Binomial distribution: 𝑃(𝑥) = 𝑛C𝑥 𝑝 𝑥 (1 − 𝑝)𝑛−𝑥 for 𝑥 = 0, 1, 2, … , 𝑛

𝑒 −𝜆 𝜆𝑥
Poisson distribution: 𝑃(𝑥) = 𝑥!
for 𝑥 = 0, 1, 2, 3, …

𝑥−𝜇
Standard normal probability: 𝑧 =
𝜎

Confidence intervals

Single mean:
𝜎 𝜎
• Population standard deviation known: 𝑥̅ − 𝑧 ≤ 𝜇 ≤ 𝑥̅ + 𝑧
√𝑛 √𝑛
𝑠 𝑠
• Population standard deviation unknown: 𝑥̅ − 𝑡(𝑛−1) ≤ 𝜇 ≤ 𝑥̅ + 𝑡(𝑛−1)
√𝑛 √𝑛

𝑝(1−𝑝) 𝑝(1−𝑝)
Single proportion: 𝑝 − 𝑧√ 𝑛
≤ 𝜋 ≤ 𝑝 + 𝑧√ 𝑛

Hypothesis tests

Single mean
𝑥̅ −𝜇
• Population standard deviation known: 𝑧-𝑠𝑡𝑎𝑡 = 𝜎
√𝑛
𝑥̅ −𝜇
• Population standard deviation unknown: 𝑡-𝑠𝑡𝑎𝑡 = 𝑠
√𝑛

(𝑝−𝜋)
Single proportion: 𝑧-𝑠𝑡𝑎𝑡 =
𝜋(1−𝜋)
√
𝑛

Difference between two means

(𝑥̅ 1 −𝑥̅ 2 )−(𝜇1 −𝜇2 )
• Population standard deviation known: 𝑧-𝑠𝑡𝑎𝑡 =
𝜎2 2
1 +𝜎2
√
𝑛1 𝑛2

• Population standard deviations unknown, assumed equal:

(𝑥̅ 1 −𝑥̅ 2 )−(𝜇1 −𝜇2 ) (𝑛1 −1)𝑠12 + (𝑛2 −1)𝑠22
𝑡-𝑠𝑡𝑎𝑡 = where 𝑠𝑝2 =
1 1 𝑛1 +𝑛2 −2
√𝑠𝑝2 (𝑛 +𝑛 )
1 2

• Paired t-test
(𝑥̅ 𝑑 − 𝜇𝑑 ) ∑(𝑥𝑑 − 𝑥̅ 𝑑 )2
𝑡-𝑠𝑡𝑎𝑡 = 𝑠𝑑 where 𝑠𝑑 = √ 𝑛−1
√𝑛

© Milpark Education Statistical Principles for Financial Analysis SPFA01-6 Formula Sheet 2023
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Regression and correlation

Regression coefficients:
𝑛 ∑ 𝑥𝑦−∑ 𝑥 ∑ 𝑦
• 𝑏1 = 𝑛 ∑ 𝑥 2 −(∑ 𝑥)2
∑ 𝑦−𝑏1 ∑ 𝑥
• 𝑏0 =
𝑛

Pearson’s correlation coefficient:

𝑛 ∑ 𝑥𝑦−∑ 𝑥 ∑ 𝑦
• 𝑟=
√[𝑛 ∑ 𝑥 2 −(∑ 𝑥)2 ]×[𝑛 ∑ 𝑦 2 −(∑ 𝑦)2 ]

(𝑛−2)
• 𝑡-𝑠𝑡𝑎𝑡 = 𝑟√ 1−𝑟 2

Important calculator buttons

𝑦 𝑥: ×

√𝑥:

Permutation:

Combination:

Factorial: !

Change number of decimals: followed by the number of decimals to

show.

© Milpark Education Statistical Principles for Financial Analysis SPFA01-6 Formula Sheet 2023
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