Outliers

Definition

Outliers are data points significantly different from others in a dataset. They can affect measures of center and overall statistical analysis.

5 Must Know Facts For Your Next Test

1. Outliers can skew mean values, making them less representative of the dataset.
2. They are often identified using methods like the Z-score or IQR (Interquartile Range).
3. In finance, outliers might represent unusual market events or errors in data collection.
4. Outliers can be influential in decision-making processes and risk assessments.
5. Proper handling of outliers is crucial for accurate financial modeling and forecasting.

Review Questions

• How do outliers impact the mean value of a dataset?
• What methods are commonly used to identify outliers?
• Why is it important to address outliers in financial data?

Related terms

Mean: The average value of a set of numbers, calculated by dividing the sum of all values by the count of values.

Median: The middle value in a list of numbers arranged in ascending or descending order.

Standard Deviation: A measure that quantifies the amount of variation or dispersion in a set of values.