Stats

Question 1

Parameter/coefficient

Answer 1

• constant (value) attached to a variable
• often used to denote the impact that a value of one variable has on
  another

Question 2

Equation

Answer 2

• a statement written in numbers and symbols and having two sides
  connected by an equal sign ( = ) or inequality signs ( ≥, ≤, > or < )
• often used to depict relationships between variables

Question 3

Example: Y = 2X + 1

Answer 3

 Y and X are variables
 2 is the parameter
 1 is the constant

Question 4

Qualitative (attribute) variable

Answer 4

non-numeric ; categorical - values refer to categories

e.g. gender: 1 = male and 2 = female

e.g. type of dwelling:
1 = detached houses, 2 = semi-detached houses, 3 = terraced houses, 4 =
flats

Question 5

 Quantitative variable

Answer 5

numerical: distances between each value on the measurement scale
are equal, which means that values represent magnitude

discrete variable
- gaps between values e.g. number of rooms in a house

Continuous variable
- any value within a range e.g. house prices; asset returns

Question 6

Risk Premium

Answer 6

A risk premium is the investment return an asset is expected to yield in excess of the risk-free rate of return. An asset’s risk premium is a form of compensation for investors. It represents payment to investors for tolerating the extra risk in a given investment over that of a risk-free asset

Question 7

Parameter/coefficient

Answer 7

• constant (value) attached to a variable
• often used to denote the impact that a value of one variable has on
  another

Question 8

Qualitative (attribute) variable

Answer 8

non-numeric ; categorical - values refer to categories

e.g. gender: 1 = male and 2 = female