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Quantitative MethodsModule 3 of 11

Statistical Measures of Asset Returns

7

Concepts

6

Formulas

2

Decisions

5

Quiz Questions

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Key Concepts

7 concepts covered in this module.

Measures of Central Tendency

Mean (arithmetic, geometric, harmonic), median (middle value, robust to outliers), mode (most frequent).

Quantiles

Quartiles divide data into 4 parts, quintiles into 5, deciles into 10, percentiles into 100.

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Formulas

6 essential formulas for this module.

Population Variance

σ² = Σ(Xi - μ)² / N

Where: μ = population mean, N = population size

Sample Variance

s² = Σ(Xi - X̄)² / (n - 1)

Where: X̄ = sample mean, n-1 for Bessel correction

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Decision Frameworks

2 decision frameworks to guide your analysis.

When to use Median vs Mean?

  • Median: when data is skewed or has outliers
  • Mean: when data is symmetric and approximately normal
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Visual overview of how concepts connect in this module.

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Measures of Central Tendency

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Answer
Mean (arithmetic, geometric, harmonic), median (middle value, robust to outliers), mode (most frequent).
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Probability Trees and Conditional Expectations