Unit III Review
Part B · Common Mistakes
⚠️ Top 10 Mistakes Students Make in Unit III
1. Using n instead of (n−1) for sample variance. Population variance divides by N; sample variance divides by (n−1). Read the question carefully — does it say "population" or "sample"?
2. Forgetting to take the square root. Variance is in squared units. SD = √variance. If the question asks for SD and you report variance, you lose marks.
3. Computing |γ₁| instead of γ₁. The sign of γ₁ tells you the direction of skewness. Reporting only the magnitude loses critical information.
4. Applying Sheppard's correction to discrete data. Sheppard's correction is ONLY for continuous, equal-width grouped data. Never apply it to discrete frequency distributions.
5. Confusing β₁ with γ₁. β₁ = μ₃²/μ₂³ (always ≥ 0, no sign). γ₁ = μ₃/μ₂^(3/2) (signed). β₁ = γ₁².
6. Using CV when the mean is negative or zero. CV = (σ/x̄)×100 is undefined when x̄ = 0 and misleading when x̄ < 0.
7. Saying kurtosis measures "peakedness" only. Kurtosis measures tail heaviness. A sharp peak with thin tails can have LOW kurtosis.
8. Mixing up raw and central moments. μᵣ' (with prime) = raw moment about origin. μᵣ (no prime) = central moment about mean. Don't confuse the notation.
9. Not verifying Σ(xᵢ − x̄) = 0. As a check: the sum of deviations from the mean must always be zero. If it's not, your mean is wrong.
10. Applying Sheppard's correction to odd-order moments. Only even-order moments (μ₂, μ₄) need correction. μ₃ is unchanged.
Unit III Review
Part D · Comprehensive Quiz
🧠 Comprehensive Quiz — Unit III (20 Questions)
Q1: The sum of absolute deviations from the mean is minimum when measured from the:
A) Mean
B) Median
C) Mode
D) Any value — it doesn't matter
Q2: If y = −2x + 10, and SD(x) = 5, then SD(y) =
Q3: The RMSD about a value A is always:
A) Equal to the SD
B) Greater than or equal to the SD
C) Less than the SD
D) Unrelated to the SD
Q4: CV is NOT meaningful when:
A) The SD is very small
B) The mean is zero or negative
C) The data has outliers
D) The sample size is large
Q5: The second central moment (μ₂) equals:
A) Standard deviation
B) Variance
C) Mean
D) MAD
Q6: Sheppard's correction for μ₂ is:
A) μ₂ + c²/12
B) μ₂ − c²/12
C) μ₂ × c²/12
D) μ₂ / (c²/12)
Q7: If Mean = 50, Median = 45, σ = 15, Karl Pearson's SK (using median) is:
A) +0.33
B) +1.0
C) −1.0
D) +0.11
Q8: Bowley's coefficient of skewness uses:
A) Mean and SD
B) Quartiles Q₁, Q₂, Q₃
C) Central moments
D) Percentiles P₁₀ and P₉₀
Q9: A distribution with β₂ = 1.8 is:
A) Leptokurtic
B) Mesokurtic
C) Platykurtic
D) Highly skewed
Q10: If μ₁' = 8 and μ₂' = 80, then the variance is:
Q11: Sheppard's correction should NOT be applied to:
A) Continuous data with equal class widths
B) Discrete frequency data
C) The second central moment
D) The fourth central moment
Q12: The moment-based skewness γ₁ is negative when:
A) The right tail is longer
B) The left tail is longer
C) The distribution is symmetric
D) μ₂ is negative
Q13: Two datasets have the same SD but different means. The one with the larger mean has:
A) Smaller CV
B) Larger CV
C) Same CV
D) CV = 0
Q14: Kurtosis is invariant under:
A) Only change of origin
B) Only change of scale
C) Both change of origin and scale (linear transformation)
D) Neither
Q15: The coefficient of variation was introduced by:
A) Ronald Fisher
B) Karl Pearson
C) Arthur Bowley
D) W.F. Sheppard
Q16: For a symmetric distribution, which is always true?
A) β₂ = 3
B) γ₁ = 0
C) SD = 0
D) MAD = 0
Q17: The value c²/12 in Sheppard's correction represents:
A) The mean of the class interval
B) The variance of a uniform distribution over one class
C) The range of the class
D) The SD of the data
Q18: If all values are multiplied by 3, which measure changes?
A) CV
B) γ₁ (skewness)
C) β₂ (kurtosis)
D) SD (it triples)
Q19: Financial returns are typically leptokurtic. This means:
A) Returns are always positive
B) Extreme events occur more often than normal models predict
C) The distribution is symmetric
D) Risk is lower than expected
Q20: Which combination correctly describes a right-skewed, leptokurtic distribution?
A) γ₁ < 0, β₂ < 3
B) γ₁ = 0, β₂ = 3
C) γ₁ > 0, β₂ > 3
D) γ₁ > 0, β₂ < 3