BUSINESS ANALYTICS FINAL EXAM
QUESTIONS WITH COMPLETE AND
DETAILED SOLUTIONS
Business Analytics definition - ANS-Term used for sophisticated forms of business data analysis, such as
portfolio analysis or time-series forecast
3 Categories of Analytics/3 purposes of analytics - ANS-1. Descriptive (Stats and Visuals)
2. Predictivie (Modelling, machiene learning to predict)
3. Prescriptive (Optimisation, produce best possible outcome)
data mining - ANS-the process of analyzing data to extract information not offered by the raw data alone
What did Business Analytics used to be called? - ANS-OR--- Operations Research
What is a mathematical model? - ANS-A mathematical model is a description of some limited aspect of
the world which is simplified but
formalised.
It is formalised because that allows us to test whether it is an accurate description
(for understanding), and to use it for prediction and decision-making.
It is simplified because its formalised: a realistic model of the world would be difficult or impossible to
formalise.
Steps in the BA process - ANS-Circle Diagram:
Data
Visualisation
Modeling
Prediction
Optimisation
Decisions
Correlation - ANS-is a simple method of measuring whether two variables are related, and if so, what
type of relationship and how strong it is
when one goes up, so does the other, or when one
goes up, the other goes down - either is equally useful to know about.
We need pair data to see if there is a correlation
What type of graph is used for a correlation? - ANS-Scatter Plot
, Pearson's correlation coefficient (Pearson's r) - ANS-A statistical estimate which is designed to
summarise the relationship between two variables using a single number (formula given in exam)
The formula returns a value within the range [1, 1]. A value of 1 or -1 indicates a perfect linear
relationship between the two variables: in a scatter plot, one could draw a straight line that would pass
through every single data point.
What does a negative r value mean? - ANS-Negative values for r indicate that when one goes up, the
other goes down.
What does a positive r value mean - ANS-that when the value of a variable goes up, the value of the
other variable also goes up
What does an r value of exactly 0 mean? - ANS-If there is absolutely no relationship between the two
variables, the value for r will be 0.
Does correlation equal causation? - ANS-correlation does not equal causation
R values ranges - ANS-+.70 or higher very strong positive relationship
+.40 to +.69 strong positive relationship
+.30 to +.39 moderate positive relationship
+.20 to +.29 weak positive relationship
+.01 to +.19 no or negligible relationship
close to 0 no relationship
-.01 to -.19 no or negligible relationship
-.20 to -.29 weak negative relationship
-.30 to -.39 moderate negative relationship
-.40 to -.69 strong negative relationship
-.70 or higher very strong negative relationship
A weak or zero linear correlation between two variables implies that there is a weak or nonexistent
linear relationship between them, but it does not.. - ANS-That does not imply that there is no other
relationship
between them. That is because linear correlation only measures the strength of any possible linear
relationship. There might be a strong non-linear relationship which nevertheless results in a zero
correlation.
Is coincidence correlation? - ANS-No, it is not. Correlation is a statistical relationship between two
variables. It involves multiple observations.
Correlation is not the same as coincidence. A coincidence is a single paired observation (e.g., one
particular person has a large height and a large weight). It does not tell us anything about the
relationship in general
Correlation after segmentation - ANS-Sometimes, you observe no correlation between two variables,
but if you measure the correlation of a subset of the observations, then you find a strong correlation.
Consider again the example of age and height in humans. With a sample of humans of all ages,
there will be very little correlation. But if we segment the population into three groups, then we
will find a strong positive correlation for the group where age is less than 20.
QUESTIONS WITH COMPLETE AND
DETAILED SOLUTIONS
Business Analytics definition - ANS-Term used for sophisticated forms of business data analysis, such as
portfolio analysis or time-series forecast
3 Categories of Analytics/3 purposes of analytics - ANS-1. Descriptive (Stats and Visuals)
2. Predictivie (Modelling, machiene learning to predict)
3. Prescriptive (Optimisation, produce best possible outcome)
data mining - ANS-the process of analyzing data to extract information not offered by the raw data alone
What did Business Analytics used to be called? - ANS-OR--- Operations Research
What is a mathematical model? - ANS-A mathematical model is a description of some limited aspect of
the world which is simplified but
formalised.
It is formalised because that allows us to test whether it is an accurate description
(for understanding), and to use it for prediction and decision-making.
It is simplified because its formalised: a realistic model of the world would be difficult or impossible to
formalise.
Steps in the BA process - ANS-Circle Diagram:
Data
Visualisation
Modeling
Prediction
Optimisation
Decisions
Correlation - ANS-is a simple method of measuring whether two variables are related, and if so, what
type of relationship and how strong it is
when one goes up, so does the other, or when one
goes up, the other goes down - either is equally useful to know about.
We need pair data to see if there is a correlation
What type of graph is used for a correlation? - ANS-Scatter Plot
, Pearson's correlation coefficient (Pearson's r) - ANS-A statistical estimate which is designed to
summarise the relationship between two variables using a single number (formula given in exam)
The formula returns a value within the range [1, 1]. A value of 1 or -1 indicates a perfect linear
relationship between the two variables: in a scatter plot, one could draw a straight line that would pass
through every single data point.
What does a negative r value mean? - ANS-Negative values for r indicate that when one goes up, the
other goes down.
What does a positive r value mean - ANS-that when the value of a variable goes up, the value of the
other variable also goes up
What does an r value of exactly 0 mean? - ANS-If there is absolutely no relationship between the two
variables, the value for r will be 0.
Does correlation equal causation? - ANS-correlation does not equal causation
R values ranges - ANS-+.70 or higher very strong positive relationship
+.40 to +.69 strong positive relationship
+.30 to +.39 moderate positive relationship
+.20 to +.29 weak positive relationship
+.01 to +.19 no or negligible relationship
close to 0 no relationship
-.01 to -.19 no or negligible relationship
-.20 to -.29 weak negative relationship
-.30 to -.39 moderate negative relationship
-.40 to -.69 strong negative relationship
-.70 or higher very strong negative relationship
A weak or zero linear correlation between two variables implies that there is a weak or nonexistent
linear relationship between them, but it does not.. - ANS-That does not imply that there is no other
relationship
between them. That is because linear correlation only measures the strength of any possible linear
relationship. There might be a strong non-linear relationship which nevertheless results in a zero
correlation.
Is coincidence correlation? - ANS-No, it is not. Correlation is a statistical relationship between two
variables. It involves multiple observations.
Correlation is not the same as coincidence. A coincidence is a single paired observation (e.g., one
particular person has a large height and a large weight). It does not tell us anything about the
relationship in general
Correlation after segmentation - ANS-Sometimes, you observe no correlation between two variables,
but if you measure the correlation of a subset of the observations, then you find a strong correlation.
Consider again the example of age and height in humans. With a sample of humans of all ages,
there will be very little correlation. But if we segment the population into three groups, then we
will find a strong positive correlation for the group where age is less than 20.
