Descriptive Statistics

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Definition: Descriptive Statistics

Descriptive statistics is the field of statistics that gives a quantitative description of main features for a collection of data.

Let us take an example to move forward and understand better.


The above table shows average salaries for various occupations in US in 1999. The table can be got by using descriptive statistics. By checking the table we get to know that we pay our teachers and police officers far less than what we pay our dentists or podiatrists. So descriptive statistics can be used as a tool for comparison and understanding of some common characteristics between a group of data.

So basically descriptive statistics gives a brief set of descriptive coefficients that summarizes a given data set , which can be either a representation of the entire population or a data set. Basically they are either the measures of central tendency of a data set or measures of variability of dispersion. Measures of central tendency mean the measure of mean, median and mode. While the measure of variability include variance or the standard deviation, skewness and the minimum and maximum variables.

With respect to finance, descriptive statistics can be used as a powerful financial tool that gives a useful summary of the return on a security for a period of time. This data is useful while performing analytical or empirical analysis of a security.


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