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Statistics for Big Data For Dummies by David Semmelroth, Alan Anderson

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Chapter 13

You’re the Only Variable for Me: Univariate Statistical Techniques

In This Chapter

arrow Understanding the properties of discrete probability distributions: the binomial and Poisson

arrow Exploring continuous probability distributions: the normal, Student’s t, lognormal, chi-square, and F

arrow Implementing statistical tests of randomness

Chapter 4 introduces the notion of a probability distribution. You use a probability distribution to describe the properties of a random variable. A random variable is actually a function — it assigns numerical values to the outcomes of a random process. For example, you might define a random variable as “the return to Apple stock over the coming trading day” or “the number of bonds in a portfolio that default over the coming year.”

The two basic types of probability distributions you may encounter in statistics are discrete distributions and continuous distributions:

  • A discrete distribution is one for which every outcome has a positive probability.
  • A continuous distribution assigns probabilities to ranges of values.

For example, the distribution of bonds that default over the coming year would be discrete, because every bond has a distinct probability ...

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