In Your Own Words, Explain the Purpose of Inferential Statistics

question 25

Essay

In your own words, explain the purpose of inferential statistics. Include in your essay the concepts of sample, population, statistic, parameter, representativeness, and the principle of EPSEM. Make sure that you define each of these terms as you develop your essay.

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Definitions:

Arbitrage Opportunities

Situations where a security or asset is simultaneously priced differently in two or more markets, allowing for risk-free profit through simultaneous buying and selling.

Spot Exchange Rate

The existing rate for the instant exchange of one currency for another.

Correlation

A numerical indicator that demonstrates how two variables move in relation to each other, showing both the intensity and the orientation of their link.

Indices

Market indicators or benchmarks that track the performance of a specific basket of assets or group of stocks, representing a specific sector, market, or economy.