The Financial Times Guide to Understanding Finance, 2nd Edition

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Stats I: Summary statistics

• Random variables
• Summarizing information
• The mean
• The median
• The mode
• The variance
• The standard deviation
• The covariance
• The correlation coefficient
• The big picture
• Excel section

I know, you don’t like stats. You are also likely to have had your share of it at school but barely remember the stuff. Well, the goal of this chapter is to get you back up to speed. Don’t worry, we’ll not go into any details, it will all be basic stuff. But a warning first: Like any other tools in statistics or finance, the ones discussed in this chapter should be used with caution. Although many decisions should never be made without them, they will hardly ever give us, by themselves, all the relevant information we need to make a ...