Page 43 - FINAL CFA SLIDES JUNE 2019 DAY 2
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LOS 8.a: Distinguish between descriptive statistics Session Unit 2:
and inferential statistics, between a population and a 8. Statistical Concepts & Market Returns
sample, and among the types of measurement
scales. P131/132
Descriptive statistics summarizes data into useful information whilst Inferential statistics makes
forecasts, estimates, or judgments about a population based on a sample drawn from it!
A population is the set of all possible members of a stated group e.g. cross-section of the
returns of all of the stocks traded on the JSE. A sample is a subset of the population.
Types of Measurement Scales (in order of usefulness)
Nominal scales - no particular order e.g. 1. ACCA class, 2. CIMA, 3. CA(SA), etc.
Ordinal scales –ranked by say no. of students per class: 1 –CA(SA), 2. CIMA, 3. CFA etc.?
Interval scales -relative ranking, plus equates scale differences; e.g. temperature: 90°C hotter than 70°
and hotter than 60° - and 10° is equal difference! Does 0° necessarily mean the absence of heat?
Ratio scales provide ranking, equal scale differences between and have a true zero point as the origin e.g.
measurement of money in purchasing power: 0$ mean? And $4.00 is what compared to $2.00?
