Instructor'S Manual: Statistical Techniques in Financial Management
Instructor'S Manual: Statistical Techniques in Financial Management
Instructor'S Manual: Statistical Techniques in Financial Management
Learning Objectives
• Understand the use and importance of statistical techniques in Financial Management
• Understand how the mean, median and mode show the ‘central value’ of data
• Understand how range, variance and standard deviation show how data is ‘spread out’
• Understand how decision-making is dependent on knowing relationship between two or more
variables
• Understand how scatter diagrams illustrate the relationship between two variables
• Use regression analysis to estimate the relationship between two variables
DISPERSION
• Dispersion is a measure of ‘spread’ of a population or of a distribution.
• In addition to central tendency, dispersion allows us to analyse a set of figures better.
• For example, the mean 5 of the set of numbers (4, 6) is more representative than the set (1, 9).
• It allows us to compare the spread of various set of numbers and if necessary avoid the outcome
with higher possibility of spread.
• Once it is determined that the data set is widely dispersed, the decision can be made as to whether
to ignore some extreme values.