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## Attempt all the questions

1. What do you mean by a hypothesis? What are the different types of hypotheses?

2. (a) What do you mean by an index number? Explain the uses of index number for analyzing the
data.

(b) What is reporting? What are the different stages in the preparation of a report?

## (a) Classification of data provides a basis for tabulation of data

(b) Statistics are like clay, with which one can make God or the Devil

b) Variation

## (d) Baye’s theorem in probability

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## (d) Correlation and Regression

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## ASSIGNMENT SOLUTION GUIDE (2019-20)

M.C.O.-03
Research Methodology & statistical analysis

Disclaimer/Special Note: These are just the sample of the Answers/Solutions to some of the Questions given in the Assignments. These
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information, data and solution. Student should must read and refer the official study material provided by the university.

## Attempt all the questions

1. What do you mean by a hypothesis? What are the different types of hypotheses?

SOLUTION

## MEANING OF THE HYPOTHESIS

As soon as a research question is formulated, it makes the hypothesis formulation imperative since it is a tentative
solution or an intelligent guess about a research question under study. It is an assumption or proposition whose
tenability is to be tested on the basis of its implications with empirical evidence and with the previous knowledge.
Modem investigators agree that, whenever possible, the research should proceed from a hypothesis. In the words of
Van Dalen . 'A hypothesis serves as a powerful beacon that lights the way for the research worker. Etymologically,
hypothesis is made up of two words 'hypo' (less than) and 'thesis', which means less than a thesis. It is the
presumptive statement of a proposition or a reasonable guess, based upon the available evidences, which the
researcher seeks to prove through his1 her study. Hypothesis is an assumption or proposition whose testability is to
be tested on the basis of the compatibility of its implications with empirical evidence with previous knowledge . It
is also a declarative statement in which the investigator makes a prediction or a conjecture about the outcome of the
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relationship. The conjecture or the prediction is not simply an "educated guess"; rather it is typically based on past
researches, which investigators gathered as evidences to advance the hypothesized relationship between variables.

In the formulation of hypothesis, the investigator looks for the statements where she the relates one or more
variables to make predictions about the relationships. The hypothesis tells the researcher what to do and why to do
in the context of the problem. For example, the researcher is interested to study a problem 'Why a gifted child
becomes a poor achiever in his class'? The researcher then, moves towards finding out the causes and factors that
have been responsible for his poor achievement. He makes a conjecture that he might be suffering with some
disease at the time of the examination. Conjecture is in the form of a hypothesis and this now determines what "he
researcher should do to verify whether it is a fact or not. He shall go to the house of the student, meet his parents
and enquire about student's health. All that which investigator is doing is by the hypothesis he had developed.
Hypothesis thus, refers to conjecture statement about the solution of a problem, which the researcher goes on to
verify on the basis of the relevant information collected by him. It is said to be a hunch, shrewd guess or supposition
about what may be the answer to a problem. It is a statement which is tested in terms of the relationship or
prediction etc., which after testing is either accepted or rejected. The terms hypothesis, theory or conclusion occur
frequently in research literature, but differ slightly from each other. 'Hypothesis' is defined as a tentative solution or
working I proposition suggested as a solution to problem, and the 'theory as the final hypothesis. which is
defensibly supported by all evidence. The final .hypothesis, which fits all the evidences, becomes the chief
'conclusion' inferred from the study . The hypothesis relates theory to observation and vice-versa. Hypotheses when
tested are either rejected or accepted, and help to infer the conclusion, which helps in theory building.

Types of Hypothesis

## There are six forms of hypothesis and they are:

 Simple hypothesis

 Complex hypothesis

 Directional hypothesis

 Non-directional hypothesis

 Null hypothesis

##  Associative and casual hypothesis

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Simple Hypothesis

It shows a relationship between one dependent variable and a single independent variable. For example – If you
eat more vegetables, you will lose weight faster. Here, eating more vegetables is an independent variable, while
losing weight is the dependent variable.

Complex Hypothesis

It shows the relationship between two or more dependent variables and two or more independent variables.
Eating more vegetables and fruits leads to weight loss, glowing skin, reduces the risk of many diseases such as
heart disease, high blood pressure, and some cancers.

Directional Hypothesis

It shows how a researcher is intellectual and committed to a particular outcome. The relationship between the
variables can also predict its nature. For example- children aged four years eating proper food over a five year
period are having higher IQ level than children not having a proper meal. This shows the effect and the
direction of effect.

Non-directional Hypothesis

It is used when there is no theory involved. It is a statement that a relationship exists between two variables,
without predicting the exact nature (direction) of the relationship.

Null Hypothesis

It provides the statement which is contrary to hypothesis. It’s a negative statement, and there is no relationship
between independent and dependent variable. The symbol is denoted by “HO”.

## Associative and Causal Hypothesis

Associative hypothesis occurs, When there is a change in one variable resulting a change in the other variable.
Whereas, Causal hypothesis propose a cause and effect interaction between two or more variables.

2. (a) What do you mean by an index number? Explain the uses of index number for analyzing the data.

SOLUTION

## MEANING OF INDEX NUMBERS

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When we talk that the general level of industrial production has registered an increase of 4 percent, it is obvious
that we are referring to the production of all those items that are produced by the industrial sector. However,
production of some of these items may be increasing while that of others may be decreasing or may remain
constant. The rate of increase or decrease and the units in which these items are expressed may differ. For
instance, cement may be quoted per kg, cloth may be per meters, cars may be per unit etc. In such a situation,
when the purpose is to measure the changes in the average level of prices or production of industrial products for
comparing over a time or with respect to geographic location, it is not appropriate to apply the technique of
measure of central tendency because it is not useful when series are expressed in different units or/and in
different items. It is in these situations, that we need a specialised average, known as index numbers. These are
often termed as ‘economic barometers’. An index number may be defined as a special average which helps in
comparison of the level of magnitude of a group of related variables under two or more situations.

Index numbers are a series of numbers devised to measure changes over a specified time period (the time period
may be daily, weekly, monthly, yearly, or any other regular time interval), or compare with reference to one
variable or a group of related variables. Thus, each number in a series of specified index number is:

## b) Calculated according to a pre-determined formula.

c) Generated at regular time intervals, sometimes during the same time interval at different places.

## d) The regular generation of numbers form a chronological series.

e) With reference to some specified period and number known as base period and base number, the latter is
always 100. For example, if the consumer price index, with base year 1996 is calculated to be 180 for the year
2003, it means that consumer prices have increased by 80 per cent in 2003 as compared to the prices prevalent in
1996.

## USES OF INDEX NUMBERS

Though originally the index number was developed for measuring the effect of change in prices, today they have
become indispensable for analyzing the data related to business and economic activity. This statistical tool can
be used in several ways as follows:
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1) Decision makers use index numbers as part of intermediate computations to understand other information
better. Nominal income can be transformed into real income. Similarly, nominal sales into real sales & so on …,
through an appropriate index number. Consumer price index, also known as cost of living index, is arrived at for
a specified group of consumers in respect of prices of specific commodities and services which they usually
purchase. This index serves as an indicator of ‘real’ wages (or income) of the consumers. For example, an
individual earns Rs. 100/- in the year 1970 and his earnings increase to Rs. 300/- in the year 1980. If during this
period, consumer price index increases from 100 to 400 then the consumer is not able to purchase the same
quantity of different commodities with Rs. 300, which he was able to purchase in the year 1970 with his income
of Rs. 100/-. This means the real income has declined. Thus real income can be calculated by dividing the actual
income by dividing the consumer price index:

Therefore, the consumer’s real income in the year 1980 is Rs. 75/- as compared to his income of Rs. 100/- in the
year 1970. We can also say that because of price increase, even though his income has increased, his purchasing
power has decreased

2) Different types of price indices are used for wage and salary negotiations, for compensating in price rise in the
form of DA (Dearness Allowance).

3) Various indices are useful to the Government in framing policies. Some of these include taxation policies,
wage and salary policies, economic policies, custom and tariffs policies etc.

4) Index numbers can also be used to compare cost of living across different cities or regions for the purpose of
making adjustments in house rent allowance, city compensatory allowance, or some other special allowance.

5) Indices of Industrial Production, Agricultural Production, Business Activity, Exports and Imports are useful
for comparison across different places and are also useful in framing industrial policies, import/export policies
etc.
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6) BSE SENSEX is an index of share prices for shares traded in the Bombay Stock Exchange. This helps the
authorities in regulating the stock market. This index is also an indicator of general business activity and is used
in framing various government policies. For example, if the share prices of most of the companies comprising
any particular industry are continuously falling, the government may think of changes in its policies specific to
that industry with a view to helping it.

7) Sometimes, it is useful to correlate index related to one industry to the index of another industry or activity so
as to understand and predict changes in the first industry. For example, the cement industry can keep track of the
index of construction activity. If the index of construction activity is rising, the cement industry can expect a rise
in demand for cement.

(b) What is reporting? What are the different stages in the preparation of a report?

SOLUTION

MEANING

Reporting simply means communicating or informing through reports. The researcher has collected some facts
and figures, analyzed the same and arrived at certain conclusions. He has to inform or report the same to the
parties interested. Therefore “reporting is communicating the facts, data and information through reports to the
persons for whom such facts and data are collected and compiled”. A report is not a complete description of what
has been done during the period of survey/research. It is only a statement of the most significant facts that are
necessary for understanding the conclusions drawn by the investigator. Thus, “ a report by definition, is simply
an account”. The report thus is an account describing the procedure adopted, the findings arrived at and the
conclusions drawn by the investigator of a problem.

## STAGES IN PREPARATION OF A REPORT

Research reports are the product of slow and painstaking and accurate work. Therefore, the preparation of the
report may be viewed in the following major stages.

## 3) Write up/preparation of rough draft.

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## 4) Polishing/finalization of the Report

Logical Understanding of the Subject Matter: It is the first stage which is primarily concerned with the
development of a subject. There are two ways to develop a subject viz. a. logically and b. chronologically. The
logical development is done on the basis of mental connections and associations between one aspect and another
by means of logical analysis. Logical treatment often consists of developing material from the simple to the most
complex. Chronological development is based on a connection or sequence in time or happening of the events.
The directions for doing something usually follow the chronological order.

Designing the Final Outline of the Report: It is the second stage in writing the report. Having understood the
subject matter, the next stage is structuring the report and ordering the parts and sketching them. This stage can
also be called as planning and organization stage. Ideas may pass through the author’s mind. Unless he first
makes his plan/sketch/design he will be unable to achieve a harmonious succession and will not even know
where to begin and how to end. Better communication of research results is partly a matter of language but
mostly a matter of planning and organizing the report.

Preparation of the Rough Draft: The third stage is the write up/drafting of the report. This is the most crucial
stage to the researcher, as he/she now sits to write down what he/she has done in his/her research study and what
and how he/she wants to communicate the same. Here the clarity in communicating/reporting is influenced by
some factors such as who the readers are, how technical the problem is, the researcher’s hold over the facts and
techniques, the researcher’s command over language (his communication skills), the data and completeness of
his notes and documentation and the availability of analyzed results. Depending on the above factors some
authors may be able to write the report with one or two drafts. Some people who have less command over
language, no clarity about the problem and subject matter may take more time for drafting the report and have to
prepare more drafts (first draft, second draft, third draft, fourth draft etc.,)

Finalization of the Report: This is the last stage, perhaps the most difficult stage of all formal writing. It is easy
to build the structure, but it takes more time for polishing and giving finishing touches. Take for example the
construction of a house. Up to roofing (structure) stage the work is very quick but by the time the building is
ready, it takes up a lot of time. The rough draft (whether it is second draft or ‘n’ th draft ) has to be rewritten,
polished in terms of requirements. The careful revision of the rough draft makes the difference between a
mediocre and a good piece of writing. While polishing and finalizing one should check the report for its
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weaknesses in logical development of the subject and presentation cohesion. He/she should also check the
mechanics of writing — language, usage, grammar, spelling and punctuation .

SOLUTION

COMPARISON

## Meaning Classification is the process of Tabulation is a process of

grouping data into different categories, summarizing data and presenting it in
on the basis of nature, behavior, or a compact form, by putting data into
common characteristics. statistical table.

## Purpose To analyse data To present data

(b) Statistics are like clay, with which one can make God or the Devil

SOLUTION

It means that you can take a load of statistics and make all sorts of conclusions you want for it to back up what
you want to find. You can ignore certain things, while present other things that support what you want to say.
An example is where 52% of children from the south of the city have passed an exam, while 54.3% of the
children in the north have passed an exam. So a politician may say that children in the north are more
intelligent. In actual fact, the sample size may only be around 17, while the test is only aimed at a small age
group, so the politician is wrong to make such a sweeping statement. It's a case of interpreting the statistics how
you like, it can be easily done, but may be wrong to do so.
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## (c) Visual presentation of statistical data has become more popular

SOLUTION Visual presentation of statistical data has become more popular and is often used by the researcher and
the statistician in analysis. Visual presentation of data means presentation of Statistical data in the form of
diagrams and graphs. In these days, as we know, every research work is supported with visual presentation
because of the following reasons.

1. They relieve the dullness of the numerical data: Any list of figures becomes less comprehensible and
difficult to draw conclusions from as its length increases. Scanning of the figures from tables causes undue strain
on the mind. The data when presented in the form of diagrams and graphs, gives a birds eye-view of the entire
data and creates interest and leaves an impression on the mind of readers for a long period.
2. They make comparison easy: This is one of the prime objectives of visual presentation of data. Diagrams and
graphs make quick comparison between two or more sets of data simpler, and the direction of curves bring out
hidden facts and associations of the statistical data.
3. They save time and effort: The characteristics of statistical data, through tables, can be grasped only after
a great strain on the mind. Diagrams and graphs reduce the strain and save a lot of time in understanding the
basic characteristics of the data.
4. They facilitate the location of various statistical measures and establish trends: Graph makes it possible
to locate several measures of central tendency such as Median, Quartiles, Mode etc. They help in
establishing trends of the past performance and are useful in interpolation or extrapolation, line of best fit,
establishing correlation etc. Thus, it helps in forecasting.
5. They have universal applicability: It is a universal practice to present the numerical data in the form of
diagrams and graphs. In these days, it is an extensively used technique in the field of economics, business,
education, health, agriculture etc.
(d) Figures don’t lie but liers can figure

SOLUTION

Numbers and math are everywhere, every day. They’re there when we’re figuring out if we can afford to order
Thai food again this week (probably not), or how much time it will take to prepare a meal (longer than it takes
to order Thai food), or whether we’re managing our monthly budgets well (maybe). This might be why it’s so
easy to conflate mathematics, and its inherent use of numbers, with data about people. A number is an
arithmetical value, expressed as a word, symbol, or figure, representing a particular quantity. Data, on the
other hand, is information expressed as numbers. Numbers themselves don’t tell a story. Data does. And data
is a chatty narrator.
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Netflix and Amazon are examples of two companies that use big data, or extremely large data sets, to market
their products to users’ individual interests. Recently, the higher education industry has tried to emulate the
successes of Netflix, Amazon, and other organizations that use big data to tailor their services to the specific
needs and interests of customers. Higher education has, for example, recently been dominated
by discussions about how big data can best be utilized to improve outcomes for institutions and other
stakeholders and help students meet their educational goals—using data, for example, to predict and track
students at greater risk of having difficulty in a particular course. And higher education administrators, faculty,
advisors, and consultants know their math—almost every university offers a major or minor in the subject, after
all. But they, too, can confuse math and numbers with data.

Higher education often refers to data itself as neutral, and that it’s how data is used that matters, for
example using student data to ensure students are retained and not prematurely asked to leave. But to reiterate:
Data is not neutral. Someone can present data about people as numbers (a mathematical symbol or object
created in abstraction). But numbers are symbols or objects used in math. They can be neutral. Data originates
from the real world and real people, who are not neutral, and so it cannot.

Higher education administrators, faculty, advisors, and consultants poorly communicate what data is, and how
applied mathematics is helpful in analyzing data to solve or understand problems in higher education.
Attempting to simplify education jargon, and the term data-driven in particular, an NPR education blogger used
a text editor that restricts you to the 1,000 most common words in the English language. Her resulting definition
for data-driven: “We should decide things using numbers.”

Here again data and numbers are made to be synonymous. Here, again, they are not. While it may seem
insignificant on the surface, any attempt to codify commonly-used language impacts the way people (ourselves
included) understand and communicate what we as practitioners and policymakers do. Any effort to simplify
language with faulty understanding and using loose diction can be detrimental for those whose data gets
collected, interpreted, and analyzed and those responsible for acting on the analysis. For another example, one
university administrator, describing how using data propelled his university to realize it needed to change its
advising strategy, reportedly stated, “All of a sudden we’re talking about real numbers.”
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First, we must acknowledge that often when we communicate and share numbers we are really talking about
data on people, systems, and norms, none of which are abstractions or neutral. This was well summarized by
Acumen’s discussion about using data to measure social impact. The authors state, “It’s all too easy to forget
that data is about human beings and their behaviors. Data is not an abstraction. The social development sector is
prone to forgetting this. We often collect data with little regard for the people behind the numbers…Data
encodes the stories of our lives, capturing not only our tastes and interests but also our hopes and fears. Data
isn’t an abstract idea or a set of numbers or qualitative responses. It can be and is, ultimately, human.”

Experts working in education have also expressed similar views. Mimi Onuoha, a fellow at Data & Society, a
research institute focused on social, cultural, and ethical issues arising from data-centric technological
development wrote, “Every data set involving people implies subjects and objects, those who collect and those
who make up the collected. It is imperative to remember that on both sides we have human beings.”

Those same human beings must also be taught to think of math differently. In addition to a new way of thinking
about data, higher education must also take seriously the appeals to make math undergraduate education more
applicable to real-world problems. By doing so, not only will math cease to be an early stumbling block for
students in their college careers, but we will also equip the next generation of leaders to have a nuanced
understanding and communication of what data is, where it comes from, and ways to use and analyze it.

## Transforming Post-Secondary Education in Mathematics (TPSE Math), a project by nationally recognized

mathematics education leaders formed in 2011, wants to make math more relevant and overhaul how it is
taught on college campuses away from the abstract to the practical. Among other things, it has called for an
entry-level math course relevant to the career goals and interests of every student at every college.

TPSE Math isn’t alone in this endeavor. Andrew Hacker, a professor emeritus at Queens College of the City
University of New York, makes the distinction between math and arithmetic, and says that colleges should
focus on teaching better and upgrading the latter. Math means algebra, trigonometry, and calculus, all part of
what he calls the “enigmatic orbit of abstractions.” And for Hacker, arithmetic is the quantitative literacy that
people actually need. Hacker has gone as far as to say that students, educators, and the like should learn to be
skeptical about numbers, especially when they’re situated in the real world. This dovetails with many others
understanding that data has its imperfections, one being its non-neutral nature.
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## (a) Historical Research

SOLUTION

Historical research is a qualitative technique. Historical research studies the meaning of past events in an
attempt to interpret the facts and explain the cause of events, and their effect in the present events. In doing so,
researchers rely heavily on primary historical data (direct accounts of events, archival data - official documents,
personal records, and records of eyewitnesses) and less frequently on secondary historical data (information
from persons who didn’t witness the event; e.g. textbooks, newspapers, encyclopedias).

(b) Variation

SOLUTION

Measures of variation are statistics that indicate the degree to which numerical data tend to spread about an
average value. It is also called dispersion, scatter, spread etc., It is related to the homogeniety of the data. In the
simple words of Simpson of Kafka the measurement of the scatterness of the mass of figures (data) in a series
about an average is called measure of variation. Therefore, we can say, variation measures the extent to which
the items scatter from average. To be more specific, an average is more meaningful when the data are examined
in the light of variation. Infect, in the absence of measure of dispersion, it will not be possible to say which one
of the two or more sets of data is represented more closely and adequately by its arithmetic mean value. Here,
the following illustration helps you to understand the necessity of measuring variability of data for effective
analysis

## (c) Splicing of Indices

SOLUTION

Sometimes, a specific situation may arise for shifting the base period of an index number series to some recent
period. For instance, in course of time a few commodities which are being considered for constructing indices
may get replaced with new commodities, as a result their relative weightage may also change. In some cases,
the weights may have become outdated and we may take into account the revised weights. Consequently,
whatever be the reasons, index number series loses continuity and now we have two different index number
series with different base periods which are not directly comparable. It is, therefore, essential to connect these
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two different series of indices into one continuous series. The statistical procedure involved in connecting these
two series of indices to make continuity is termed as ‘Splicing’. Thus, splicing means reducing two overlapping
series of indices with different base periods into a continuous index number series. In equation form, we can
say,

## (d) Baye’s theorem in probability

SOLUTION

Bayes’ theorem describes the probability of occurrence of an event related to any condition. For example: if we
have to calculate the probability of taking a blue ball from the second bag out of three different bags of balls,
where each bag contains three different color balls viz. red, blue, black. Such case where probability of
occurrence of an event is calculated depending on other conditions is known as conditional probability.

## Derivation of Bayes Theorem:

Statement:Let E1,E2,…,En} be a set of events associated with a sample space S, where all the
events E1,E2,…,En have nonzero probability of occurrence and they form a partition of S. Let A be any event
associated with S, then according to Bayes theorem,

## (a) Inductive and Deductive logic

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Deductive reasoning

Deductive reasoning is a basic form of valid reasoning. Deductive reasoning, or deduction, starts out with a
general statement, or hypothesis, and examines the possibilities to reach a specific, logical conclusion,
according to California State University. The scientific method uses deduction to test hypotheses and theories.
"In deductive inference, we hold a theory and based on it we make a prediction of its consequences. That is, we
predict what the observations should be if the theory were correct. We go from the general — the theory — to
the specific — the observations," said Dr. Sylvia Wassertheil-Smoller, a researcher and professor emerita at
Albert Einstein College of Medicine.
Deductive reasoning usually follows steps. First, there is a premise, then a second premise, and finally an
inference. A common form of deductive reasoning is the syllogism, in which two statements — a major premise
and a minor premise — reach a logical conclusion. For example, the premise "Every A is B" could be followed
by another premise, "This C is A." Those statements would lead to the conclusion "This C is B." Syllogisms are
considered a good way to test deductive reasoning to make sure the argument is valid.

For example, "All men are mortal. Harold is a man. Therefore, Harold is mortal." For deductive reasoning to be
sound, the hypothesis must be correct. It is assumed that the premises, "All men are mortal" and "Harold is a
man" are true. Therefore, the conclusion is logical and true. In deductive reasoning, if something is true of a
class of things in general, it is also true for all members of that class.

According to California State University, deductive inference conclusions are certain provided the premises are
true. It's possible to come to a logical conclusion even if the generalization is not true. If the generalization is
wrong, the conclusion may be logical, but it may also be untrue. For example, the argument, "All bald men are
grandfathers. Harold is bald. Therefore, Harold is a grandfather," is valid logically but it is untrue because the
original statement is false.

Inductive reasoning

Inductive reasoning is the opposite of deductive reasoning. Inductive reasoning makes broad generalizations
from specific observations. Basically, there is data, then conclusions are drawn from the data. This is called
inductive logic, according to Utah State University.
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"In inductive inference, we go from the specific to the general. We make many observations, discern a pattern,
make a generalization, and infer an explanation or a theory," Wassertheil-Smoller told Live Science. "In
science, there is a constant interplay between inductive inference (based on observations) and deductive
inference (based on theory), until we get closer and closer to the 'truth,' which we can only approach but not
ascertain with complete certainty."

An example of inductive logic is, "The coin I pulled from the bag is a penny. That coin is a penny. A third coin
from the bag is a penny. Therefore, all the coins in the bag are pennies."

Even if all of the premises are true in a statement, inductive reasoning allows for the conclusion to be false.
Here's an example: "Harold is a grandfather. Harold is bald. Therefore, all grandfathers are bald." The
conclusion does not follow logically from the statements.

Inductive reasoning has its place in the scientific method. Scientists use it to form hypotheses and theories.
Deductive reasoning allows them to apply the theories to specific situations.
(b) Pilot study and Pre-test

SOLUTION

Pilot Study?

Ashley is a graduate student who wanted to conduct a research study to test whether small group math games
helped children learn more math. She designed an experiment to research this question, which included three
teachers facilitating small group math games with children. It was important to pick the right games and
establish exactly how the games would be facilitated so that each teacher was doing exactly the same thing.
These were good reasons to conduct a pilot study before the main study.

A pilot study is a research study conducted before the intended study. Pilot studies are usually executed as
planned for the intended study, but on a smaller scale. Although a pilot study cannot eliminate all systematic
errors or unexpected problems, it reduces the likelihood of making a Type I or Type II error. Both types of
errors make the main study a waste of effort, time, and money.
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Pre-Test

Can be used to refer to two different activities. A pre-test is where a questionnaire is tested on a (statistically)
small sample of respondents before a full-scale study, in order to identify any problems such as unclear wording
or the questionnaire taking too long to administer. A pre-test can also be used to refer to an initial measurement
(such as brand or advertising awareness) before an experimental treatment is administered and subsequent
measurements are taken.

## (c) Random Sampling and Non-random Sampling

SOLUTION

RANDOM SAMPLING
We’re dealing with random sampling whenever the following conditions are met:
(1) Every element in our population has a nonzero probability of being selected as part of the sample.
(2) We have accurate knowledge of this probability, known as the inclusion probability, for each element in the
sampling frame.
If both of these criteria are met, it is possible to obtain unbiased results about the population from studying the
sample. To obtain unbiased results, it may sometimes be necessary to use weighting methods; such weighting is
possible precisely because we know each individual's probability of being included in the sample. Samples
obtained under these conditions are also known as random samples.

The above definition leads us to conclude that we can only create a random sample if we have a sampling
frame. A national census, a database of mailing addresses within a city and a list of a business’s customers are
all examples of sampling frames that make random sampling possible. In each of the above cases, the
population to be studied is different: the residents of a country, the households in a city and a business’s
customers, respectively.

Once we have our sampling frame, the random sampling method defines the exact method we will use to select
our sample; for example, simple random sampling, systematic sampling, stratified sampling, disproportional
stratified sampling, cluster sampling, and so on.

NON-RANDOM SAMPLING
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All that said, it’s not easy to meet the criteria imposed by random sampling:
(1) It is relatively unusual to have a sampling frame available to you when you’re conducting market studies.
(2) Ensuring that every individual in a population has a nonzero probability of being selected is just as difficult
to accomplish; knowing every sampling unit’s exact inclusion probability is even more difficult. The
individuals that cannot be selected as part of a sample are generally referred to as excluded units.

For these reasons—and to minimize costs—researchers often turn to other sampling methods, known as
nonrandom sampling. When using these alternative methods, researchers generally select elements for the
sample based on hypotheses about the population of interest, known as selection criteria. For example, if we’re
selecting our sample by stopping people on the street, attempting to stop an equal number of men and women
(to coincide with the presumed gender distribution in the population) would be a criterion of nonrandom
sampling.

In these cases, since the selection of units for the sample isn’t random, we shouldn’t talk about error estimates.
In other words, a nonrandom sample tells us about a population, but we don’t know how precisely: we can’t
determine a margin of error or a confidence level.

These types of sampling methods include availability sampling, sequential sampling, quota sampling,
discretionary sampling and snowball sampling.

## (d) Correlation and Regression

SOLUTION

Correlation, in the finance and investment industries, is a statistic that measures the degree to which two
securities move in relation to each other. Correlations are used in advanced portfolio management, computed as
the correlation coefficient, which has a value that must fall between -1.0 and +1.0.

Regression is a statistical measurement used in finance, investing, and other disciplines that attempts to
determine the strength of the relationship between one dependent variable (usually denoted by Y) and a series
of other changing variables (known as independent variables).

Regression helps investment and financial managers to value assets and understand the relationships between
variables, such as commodity prices and the stocks of businesses dealing in those commodities.