Reading 7: Statistical Concepts and Market Returns

LOS a, (Part 1): Differentiate between descriptive statistics and inferential statisitics, and between a population and a sample.

1、What is the main difference between descriptive statistics and inferential statistics?

A)   Descriptive statistics are used to make forecasts about the likelihood of upcoming events while inferential statistics are used to summarize any data set.

B)   Descriptive statistics are calculations based on small samples while inferential statistics are calculations based on large samples.

C)   Descriptive statistics are used to summarize data while inferential statistics are used to obtain precise information about a large data set.

D)   Descriptive statistics are used to summarize a large data set while inferential statistics involves procedures used to make forecasts or judgments about a large data set by examining a smaller sample.

The correct answer was D)

Descriptive statistics are used to summarize a large data set while inferential statistics are based on procedures used to make forecasts or judgments about a large data set by examining a smaller set of data.