Module 3 (decimals or fractions/infinite)

MMW

Classification and Organization of Data Scales of measurement

• Nominal: Categorical data and numbers that are simply
Statistics – branch of mathematics that deals with the used as identifiers or names represent a nominal scale of
processes of gathering, describing, organizing, analyzing measurement. All qualitative variables use this scale. Ex:
and interpreting numerical data as well as drawing valid gender, zip codes, religion, marital status, major field of
conclusions and making reasonable decisions on the basis study, names of school attended, brands of soaps
of such analysis. purchased, diagnosis
• Ordinal: represents an ordered series of relationships
Collect – survey, test, interview, observe, experiment, and or rank order. One category is higher than the other. Ex:
register social class or incomes, responses to an item or
Organize – tables, graphs, texts instrument (always, sometimes, never), contests results
Analyze – numerical analysis (first, second, third), birth order study (first or
(“most”, “how many percent”, “least”) second-born)
Interpret – give the meaning or • Interval: A scale which represents quantity and has
implication of the findings, equal units but for which zero represents simply an
conclude additional point of measurement is an interval scale. The
Fahrenheit scale is a clear example of the interval scale of
Statistics – tool of all sciences; language of research measurement. Other examples: aptitude test, Lickert
scale (5 or 7 scale points)(strongly disagree, disagree,
Definition of Terms neutral, agree, strongly agree), scores on test as a measure
of knowledge
• Data – raw materials which statistician works
• Ungrouped or raw data – data which are not organized • Ratio: The ratio scale of measurement is similar to the
in any specific way • Grouped data – data organized into interval scale in that it also represents quantity and has
groups or categories with corresponding frequencies equality of units. However, this scale also has an absolute
• Population – refers to groups of aggregates of people, zero (no numbers exist below the zero). Strongest level of
objects, materials, events or things of any form. measurement. Ex: election vote, speed of production line,
Measures are called parameters. average delivery and measurements of length, weight,
• Sample – subgroup of the population; taken from the area, volume, density, velocity, money, duration.
population as to represent the population characteristics
or traits. Measures are called estimates of statistics. • Kinds of statistics
Variable – the characteristics that being studied. • Descriptive statistics are used to organize or
Examples are gender, age, intelligence, personality type, summarize a particular set of measurements. In other
attitudes, political or religious affiliation, height, weight, words, a descriptive statistic will describe that set of
marital status, etc. measurements.
• Constant – is a quantity that does not change its value • Inferential statistics use data gathered from a sample
• Measurement – is the process of assigning a numerical to make inferences about the larger population from
value to a variable which the sample was drawn.
• Qualitative – have values that are described by words Types of inferential statistics:
rather than numbers; represent differences in quality, • Parametric – appropriate when the data represent
character or kind. Example: gender, birthplace, interval or ratio scale of measurement and the
geographic locations, religious preference, marital status distribution approximates a normal curve
• Quantitative variables – arises from counting,
measuring something or from some kind of mathematical • Non-paramatric – appropriate when the data represent
operation; numerical in nature and can be ordered or an ordinal or nominal scale or when nature of the
ranked Example: weight, height, test scores, speed, body distribution is not known
temperature
Measures of Central Tendency
Note: there are variables that can be both expressed both
qualitatively and quantitatively like grades in school in Central Tendency is the numerical or statistical value
percent or in letters that tends to locate the middle set of data. It provides a
very convenient way of describing a set of scores with a
Quantitative variables may be classified as: single number that describes the PERFORMANCE of the
• Discrete – values can be counted using integral values group.
ex. Number of enrollees, drop outs, graduates, death, cars, Mean or Average
employees, math subjects (integral values/finite) • It is the most commonly used average
Continuous – can assume any numerical value over an or measure of central tendency.
interval or intervals Ex. Height, weight, temperature, Where,
time, pressure of a tire, number of kilometers driven
X- is the value of each item For example, consider the following data: 28, 25, 24, 29,
n- is the number of items 33, 42, 25, 39, 31, 21, 31, 30 and 48.

Measures of Relative Position

MEDIAN
It is the value of the middle term when data are arranged In addition to measures of central tendency and measures
in either ascending or descending order. of dispersion, there are

MODE measures of position, which are used to locate the relative

It is referred to as the most frequently occurring value in position of value in the data
a given set of data.
set. Some of these measures are percentiles, deciles and
Types of Mode: quartiles.
▪ Unimode
▪ Bimodal I. Quartiles (denoted by Qk) are positional measures that
▪ Multimodal divided the distribution
▪ No mode
into four parts or three score points, such as first quartile
There are limitations as to how measures of central (Q1), second quartile
tendency are used. Mean is only used for interval or
ratio level of measurements. It is the most reliable
(Q2), and third quartile (Q3).
measure of central tendency because it uses the values
in the distribution.
• first quartile (Q1) separates the first one-fourth of the
distribution from
If the data set has extreme scores, it is better to use the
median. The median is also use for ordinal level of
measurement. the other three-fourths and is equal to 25th percentile.

Measure of dispersion • second quartile (Q2) separates the first half of the
distribution from the
Measure of dispersion is a single value that describes
the spread of a distribution. These are the range, half and is equal to 50% percentile and also equal to the
interquartile range, variance and standard deviation. median of the
I. Range is the difference between the highest value and
the lowest value of a set of data. Range = highest value – distribution
lowest value
II. Interquartile range is the middle 50% of a set of data. • third quartile (Q3) separates the lower three-fourths of
It is the difference between the upper and lower the distribution
quartiles.
from the upper one-fourth and is equal to 75th percentile.
Interquartile range = upper
quartile – lower quartile • To calculate the quartiles, use Mendenhall and Sincich
Method
The lower and upper quartiles are based on the median.
The lower quartile (also
known as first quartile) is the 50% of the values before
the median, while the Qk =
upper quartile (also known as the third quartile) is the
50% of the values after the median. k
III. Standard Deviation is based on the mean. This
implies the distance of each observation from the mean. 4
The formula for standard deviation is
IV. Variance is the square of the standard deviation.
(n + 1)
The range is the weakest measure of dispersion because it
II. Deciles (denoted by Dk) are positional measures that
only uses the lowest
divided the distribution
and highest values.
When there are extreme values, it is better to use
the interquartile range. into 10 parts or 9 score points.
The standard deviation is used for interval or ratio level of
measurement and it • To calculate the deciles, use Mendenhall and Sincich
is most reliable of all measures of dispersion. It tells how Method
spread out each distribution is.
Dk =
k

10 (n + 1)

III. Percentiles (denoted by Pk) are positional measures

that divided the

distribution into 100 parts or 99 score points.

• To calculate the percentiles, use Mendenhall and Sincich

Method

Pk =k

100 (n + 1)

For example, consider the following data: 10, 12, 8, 9, 17,

5, 9, 14, 10, 11 and

Normal Distribution

I. Normal distribution is a continuous probability

distribution. This means that it generally uses either
interval or ratio data. The histogram is a great

II. Standard normal distribution has the same

properties as that of the normal distribution except that
the mean is 0 and the standard deviation is 1. The
following figure shows the standard normal distribution.

Linear Correlation Analysis

I. Correlation analysis is the study of relationship

between independent and dependent variable. It
measures the strength and direction continuous bivariate
data.
Examples of bivariate data is time and academic
performance, mass and width, etc.
• The closer the value of r to either -1 or +1 means there is
either strong negative or strong positive linear
relationship between the two variables.
• Scatterplot is a visual representation of the linear
relationship between the variables It is a graph involving
the x – and y – axes.
 Finding Interest
Arthur invested P50,000 in an institution that offers
interest rate of 3% per annum. How much will he earn
for a year?
I=Prt
Module 4 I = 50,000 x 3% x 1 year
MMW I = 1,500

FV = P + I
Wages, rent, and interest are three common ways to earn FV = 50,000 + 1,500 = 51,500
money:
• A wage refers to money received for letting Compound Interest
someone use your labor. • Rent refers to money
received for letting someone use your property, Compound interest is the interest on a loan or deposit
especially real estate. calculated based on both the initial principal and the
• Interest refers to money received for accumulated interest from previous periods.

letting someone use your money Interest FV = P (1+r)n

When money is borrowed, the lender expects to be paid FV = compound amount

back the amount of the loan plus an additional charge P = principal amount
for the use of the money. This additional charge is called r = interest rate per period
interest. When money is deposited in a bank, the bank n = no. of compounding period
pays the depositor for the use of the money. The money
the deposit earns is also called interest.

Interest can be computed in two ways: either as simple

interest or as compound interest.

Principal Amount – in the context of borrowing,

principal is the initial size of a loan; it can also be the Compound Interest (Annual Compounding)
amount still owed on a loan.
A single deposit , earning compound
Future Value – the value of a current asset at a future interest for years at an annual rate , will
date based on an assumed rate of growth. It is grow to a future value according to the
important to investors and financial planners as they use formula
it to estimate how much an investment made today will FVn = P (1+r)n
be worth in the future.
Interest compounded once each year is compounded
annually. Many financial institutions compound interest
FV = P + I
more often. For example, instead of paying an annual
FV = P (1+rt)
rate of 8% once a year, a bank might pay 4% twice each
year, or 2% four times each year. The annual rate, 8%, is
Maturity Date – refers to the moment in time when the also called the nominal rate, and the time between
principal of a fixed income instrument must be repaid to interest calculations is called the conversion period. If
an investor. It is likewise referring to the due date on there are periods each year, interest is paid at the
which a borrower must pay back an installment loan in periodic rate given by the following formula.
full.
Determining the Future Value of an Investment
Ernie invested P200,00 in a bank that
Simple Interest offers 5% simple interest per year. •
How much money will be his money
Simple interest is computed by finding the product after 5 years?
of the principal (the amount of money on deposit), • How much will be his total interest after 5 years?
the rate of interest (usually written as a decimal),
and the time FV = P (1+rt)
FV = 200,000 [1+(0.5)(5)]
Interest = Principal × Rate × Time FV = 250,000
I = FV – P
Determining Interest
I = 250,000 – 200,000
Darlene invests P250,000 in a friend’s company. Her
I = 50,000
investment will earn a simple interest rate of 5% per
Determining the Principal Amount
year. How much will she earn after 5 years?
Determine the principal amount that you need to invest
I = 250,000 x 5% x 5 years = 62,500
at a simple annual interest of
 8% to have a total amount of P446,400 at the end of 3 fees, such as tuition, books and supplies, and living
years. expenses. It may differ from other types of loans in the
P= fact that the interest rate may be substantially lower
FV 1 + rt = 446,400 1 + (0.08)(3) = 360,000 and the repayment schedule may be deferred while the
student is still in school.
Mortgage and Amortization
Mortgages
A mortgage is a type of amortized loan in which the A loan that the borrower uses to purchase or maintain a
debt is repaid in regular installments over a period. The home or other form of real estate and agrees to pay back
amortization period refers to the length of time, in over time, typically in a series of regular payments. The
years, that a borrower chooses to pay off a mortgage. property serves as collateral to secure the loan.
Individuals and businesses use mortgages to buy real
P – principal amount estate without paying the entire purchase price upfront.
PM – periodic payment Over a specified number of years, the borrower repays
r – rate the loan, plus interest, until they own the property free
n – number of payments per year and clear. Mortgages are also known as "liens against
t – number of years property" or "claims on property." If the borrower stops
paying the mortgage, the lender can foreclose on the
A credit card is a thin rectangular piece of plastic or property.
metal issued by a bank or financial services company that
allows cardholders to borrow funds with which to pay for Auto Loans
goods and services with merchants that accept cards for Auto loans let you borrow the money you need to
payment. Credit cards impose the condition that purchase a car. Since car loans are considered “secured,”
cardholders pay back the borrowed money, plus any they require you to use the automobile you’re buying as
applicable interest, as well as any additional agreed-upon collateral for the loan.
charges, either in full by the billing date or over time. This is both good news and bad news. The fact that your
loan is secured does put your car at risk of repossession
if you don’t repay the loan, but having collateral typically
A finance charge definition is the interest you'll pay on helps you qualify for lower interest rates and better auto
a debt, and it's generally used in the context of credit loan terms. Auto loans typically come with fixed interest
card debt. A finance charge is calculated using your rates and loan terms ranging from two to seven years,
annual percentage rate, or APR, the amount of money but it’s possible to negotiate different terms depending
you owe, and the time period. on your lender.

What is the Average Daily Balance Method? Personal Loans

The average daily balance is a common accounting A personal loan is an amount of money you can borrow
method that calculates interest charges by considering to use for a variety of purposes. It can be offered by
the balance invested or owed at the end of each day of banks, credit unions, or online lenders. The money you
the billing period, rather than the balance invested or borrow must be repaid over time, typically with
owed at the end of the week, month, or year. The average interest. Personal loans can be secured, meaning you
daily balance is used by credit card companies to need collateral to borrow money, or unsecured, with no
calculate the amount of interest due on a credit card collateral needed. Some lenders may also charge fees for
payment by looking at the balance a customer carries personal loans.
each day of the billing cycle. The average daily balance is
calculated by multiplying the daily interest rate by each Payday Loans
day's balance. Payday loans are short-term, very high interest loans
available to consumers. It is typically based on how
Credit card tips to help avoid common problems: much you earn, and you usually have to provide a pay
• Pay off your balance every month stub when applying for one. Payday loans charge
• use the card for needs, not wants borrower high levels of interest and do not require any
• never skip a payment collateral, making them a type of unsecured personal
• pay your full balance each time loan.
• use credit card as budgeting tool
• use as reward card Borrowing from retirement and life insurance
• stay under 30% of your credit limit Borrowing from your life insurance policy can be a quick
• don’t lend out your credit card and easy way to get cash in hand when you need it. You
• protect yourself from credit card fraud can only borrow against a permanent or whole life
insurance policy. Policy loans are borrowed against the
death benefit, and the insurance company uses the
Types of Loans policy as collateral for the loan

Student Loans
Type of loan designed to help students pay for Debt consolidation is the act of taking out a single loan to
post-secondary education or college and the associated pay off multiple debts. There are two different kinds of
debt consolidation loans: secured and unsecured. Benefits Types of Bonds
of debt consolidation include a single monthly payment in Maturity-based Bonds – Bonds categorized based on
lieu of multiple payments and a lower interest rate. the length of time it will mature. Issuer-based bonds –
Bonds categorized based on the issuer.

Borrowing from friends and family The Market

The main advantage of receiving a loan from a friend or • Stocks and bonds are traded daily at stock
family member is that your “lender” is more likely to be exchange.
flexible about the amount borrowed and payment • In our country, the agency is called
arrangements. That means you could borrow 100% of the Philippine Stocks Exchange • Stock market is a
amount you need at a very low-interest rate – possibly place where shares of pubic listed companies
0% — and get an affordable monthly repayment are traded.
schedule.
PSE board lot
Cash Advances What’s the minimum amount?
A cash advance is a type of short-term loan, often issued There’s actually no definite answer. That’s because
by a credit card company, and usually involving high there is a rule that dictates how much you need to
interest and fees. acquire stocks.
According to the Philippine Stock Exchange, you have
There are common types of businesses—sole to follow what is stated in the minimum board lot as
proprietorship, partnership, and corporation—and each shown in the table.
comes with its own set of advantages and disadvantages. The minimum amount depends on the stock price and
Companies buys and sells products and/or services to the required no. of shares.
consumers with the aim of making a profit.

Financial risk is a chance you take of either making or

losing money on an investment. Investments are based
on
• Liquidity – how easy to get your money out
• Safety – how much risk is involved
• Return – how much you can expect to earn

A mutual fund is a company that brings together money

from many people and invests it in stocks, bonds or other
assets. The combined holdings of stocks, bonds or other
assets the fund owns are known as its portfolio. Each
investor in the fund owns shares, which represent a part
of these holdings.

Stocks are simply ownership shares of corporations.

When a company issues stock, it is selling a piece of itself
in exchange for cash. Stocks are equity instruments and
can be considered as taking ownership of a company.

Bonds, on the other hand, are debt. When an entity issues

a bond, it is issuing debt with the promise to pay interest
for the use of the money.