Statistical methods in business and economics

Statisticians use the correlation coefficient to measure the direction and strength of a linear relationship between two variables. The values of correlation coefficients lie on the range between negative one and positive one, these numbers being inclusive. According to the diagram in question 1, the dots are close to each other but not close enough to call it a robust correlation. These variables are a mildly strong correlation. The dots are also downward sloping meaning that the correlation is negative. A better estimate of the correlation coefficient of the scatter plot is by trying to guess the two variables from the scatter plot and using a statistical analysis tool like Microsoft Excel to see the possible correlation coefficient from the values the Data Analyst guessed.

The Data Analyst typed the values from the scatter plot in question 1 and put them in Microsoft Excel. The Analyst then plotted the scatter plot, which turned out to be similar to the one in question 1. The Data Analyst confirmed that the values in Excel could be the same values that were used to draw the scatter plot in the question, or the values have minimal differences. A screenshot of what the Data Analyst did in Microsoft Excel follows (MathPower, 2018). Nonparametric statistical techniques are indeed based on fewer assumptions about the population compared to parametric statistical techniques. This statement can be proven by the fact that nonparametric statistical techniques do not require the normality assumption to be true to conduct the different nonparametric tests.

The nonparametric techniques do not assume the sample or population size and distribution. These omissions make the nonparametric techniques more applicable even to qualitative data and more robust. Unlike in parametric tests, the data needed for nonparametric analyses can be categorical or ranked data. The Kolmogorov-Smirnov one sample test. The assumptions for this test include the variable in the expression is continuous with an ordinal scale and is an independent random sample from a population with an unknown median. The one-sided hypothesis testing takes the population median is equal to the specified median value against the population median is less than the specified median value i. e. H0 :   0 against H1 :  < 0 Reject the null hypothesis whenever the general empirical cumulative distribution functions are greater than the individual empirical distribution functions.

These numbers measure the fluctuations of related variables. The index numbers are fed in a statistical device to measure these fluctuations. There are several types of index numbers. These types include simple index numbers, composite index numbers, price index numbers, and quantity index numbers. Simple index numbers measure the change in one variable compared to the base. The challenges a Business Analyst can face while using index number include data collection, selection sorting, and grouping of commodities, choices of an index, average, and base period. Choosing the base year is a hectic task and requires the Business Analyst to be careful and choose the year with stable economic performance and relatively average prices. The base year should also not be very far away from the current year.

This is because if the gap is vast, it is possible that new commodities could have been introduced into the market, or the old commodities were upgraded, and the prices changed significantly (Muley, 2016). Average prices do not also make senses in the context where the situation is complicated and involves too many products. Based on prior information, the base year is 2011, the base value of 46. 9 and a base value of 100. The rest of the information is shown below (EMathZone, 2018). Year Index of Car Insurance Premium Insurance Premium (£s) 2013 107 412 2014 100 385 2015 100. 4 429 References Elrod, D. html Hesse, C.  A. , Nortey, E. , & Ofosu, J.  B. html Kenton. (2015, July 31). What assumptions are made when conducting a t-test? Retrieved July 10, 2019, from https://www. investopedia. com/ask/answers/073115/what-assumptions-are-made-when-conducting-ttest.