What is a Random Variable? A random variable (stochastic variable) is a type of variable in statistics whose possible values depend on the outcomes of a certain random phenomenon. Since a random variable can take on different values, it is commonly labeled with a letter (e.g., variable “X”). Each variable possesses a specific probability distribution function…
What is the Central Limit Theorem (CLT)? The Central Limit Theorem (CLT) is a statistical concept that states that the sample mean distribution of a random variable will assume a near-normal or normal distribution if the sample size is large enough. In simple terms, the theorem states that the sampling distribution of the mean approaches…
What is Statistics? Statistics is a term that is derived from the Latin word “status,” which means a group of figures that are used to represent information about a human interest. It refers to the technique that is developed for the purpose of collecting, reviewing, analyzing, and drawing conclusions from quantified data. The data obtained…
What is Kurtosis? Kurtosis is a statistical measure that defines how heavily the tails of a distribution differ from the tails of a normal distribution. In other words, kurtosis identifies whether the tails of a given distribution contain extreme values. Along with skewness, kurtosis is an important descriptive statistic of data distribution. However, the two…
What are Black Swan Events? In this article, we provide examples of black swan events as they relate to the financial industry. The financial markets are the context in which black swan events are most commonly referred to. In the investing world, a black swan event is an extremely negative event or happening that is…
Who is an Annuitant? An annuitant is an entity that is entitled to a series of payments on an interval basis. Annuitants are often investors or retirees receiving their pension payments. Primarily, financial institutions and life insurance companies utilize an annuity payment structure to provide income on a periodic basis. Annuities often begin…
What is Money Management? Money management refers to the process of tracking and planning an individual or group’s use of capital. In personal and corporate finance, money management usually includes budgeting, spending, saving, and investing. Private banking financial advisors provide money management services to individual customers. Commercial banking provides money management to corporate clients. In…
What is Parameter? A parameter is a useful component of statistical analysis. It refers to the characteristics that are used to define a given population. It is used to describe a specific characteristic of the entire population. When making an inference about the population, the parameter is unknown because it would be impossible to collect…
What is Fraud? Fraud refers to any deceptive activity engaged in by an individual with the aim of gaining something through means that violate the law. One keyword in fraud is deception, wherein the perpetrator leads their victim to believe in an untruth in order to obtain a benefit or value. The most common place…
