# Business Statistics Terms

### 39 terms by CalebWard_42

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### Probability

A value between zero and one, inclusive, describing the relative possibility an event will occur

### Experiment

A process that leads to the occurence of one and only one of several possible observations

### Outcome

A particular result of an experiment

### Event

A collection of one or more outcomes of an experiment

### Mutually Exclusive

The occurence of one event means that none of the other events can occur at the same time

### Collectively Exhaustive

At least one of the events must occur when an experiment is conducted

### Empirical or Relative Frequency

The probability of an event happening is the fraction of the time similar events happened in the past
Empirical Probability= # of Times Event Occurs/Total Number of Observations

### Law of Large Numbers

Over a large number of trials, the empirical probability of an event will approach its true probability

### Subjective Probability

The likelihood of a particular event happening that is assigned by an individual based on whatever information is available

### Special Rule of Addition

P(A or B) = P(A) + P(B)

P(A)= 1-P(~A)

### Joint Probability

A probability that measures the likelihood two or more events will happen concurrently

### General Rule of Addition

P(A or B) = P(A) + P(B) -P(A and B)

### Independence

The occurence of one event has no effect on the probability of the occurence of another event

### Special Rule of Multiplication

P(A and B) = P(A)P(B)

### Conditional Probability

The probability of a particular event occurring, given that another event has occurred

### General Rule of Multiplication

P(A and B) = P(A)P(B/A)

### Contingency Table

A table used to classify sample observations according to two or more identifiable characteristics

### Prior Probability

The initial probability based on the present level of information

### Posterior Probability

A revised probabilty based on additional information

### Multiplication Formula

If there are m ways of doing one thing and n ways of doing another thing, there are m x n ways of doing both

### Permutation

Any arrangement of x objects selected from a single group of n possible objects

### Probability Distribution

A listing of all the outcomes of an experiment and the probability associated with each outcome

### Characteristics of a Probability Distribution

1) The probability of a particular outcome is between 0 and 1
2) Outcomes are mutually exclusive events
3) The list is exhaustive- Sum of probabilities is 1

### Random Variable

A quantity resulting from an experiment that, by chance, can assume different values

### Discrete Random Variable

A random variable that can assume only certain clearly separated values

### Mean of a Probability Distribution

The sum of x values times probability of its outcome

### Variance of a Probability Distribution

Sum of (X values minus the mean) squared times the values expected probability

### Uniform Probability Distribution

Rectangular in shape and is defined by minimum and maximum values

### Normal Probability Distribution

Bell-Shaped, Symmetrical, Asymptotic (Closer and closer to the x axis but never touches it)

### Z Value

The signed distance between a selected value, designated X, and the mean, divided by the standard deviation(X-Mean/Standard Deviation)

### Binomial Probability Distribution

Widely occurring discrete probability distribution

### 4 Characteristics of a Probability Distribution

1) Outcome on each trial of an experiment either success of failure
2) Random variable counts the number of successes in a fixed number of trials
3) Probability of success and failure stay same for each trial
4) Trials are independent

### Hypergeometric Probability Distribution

When probability of success does not remain teh same from trial to trial

### 4 Characteristics Hypergeometric Probability Distribution

1) Outcome on each trial of an experiment either a success or failure
2) Random variable is number of successes in a fixed number of trials
3) Trials are not independent
4) Proability of a success changes for each trial

### Poisson Probability Distribution

Describes the number of times some event occurs during a specified interval

### 3 Characteristics of a Poisson Probability Experiment

1) Random Variable is number of times some event occurs during a defined interval
2) Probability of the event is proportional to size of the interval
3) Intervals do not overlap and are independent

### Tree Diagram

Graph that is helpful in organizing calculations that involve several stages

### Bayes Theorem

Formula to arrive at the probability God does exist based on evidence available to him on earth

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