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Using Excel for Statistical Analysis - Terms You Should Understand Before You Start by Stephen Nelson

(Contd. from page 2...)

Probability Distributions

The term probability refers to the likelihood that an event will happen. Probabilities range between 0 (impossible) and 1 (inevitable).

A probability distribution graphically depicts how probabilities are distributed over discrete values or ranges of the random variable. Probability distributions can take on several shapes. For example, a uniform probability distribution is rectangular-it occurs when there's an equal probability for every value of the random variable.

Another common probability distribution is the normal or bell curve. This occurs when there's a relatively high probability of a random variable taking a certain value or range and a symmetrically diminishing probability as you move away from this value.

Discrete versus Continuous Variables

A discrete variable is one that can't fall to an infinite number of digits. For example, the number of children in a family is a discrete number, in this case a non-negative integer. A continuous variable, on the other hand, can take on a value with any number of digits. For example, you can theoretically calculate the time it takes a person to run a mile down to the smallest fraction of a second.

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About Stephen Nelson
About the author: Seattle CPA Stephen L. Nelson wrote the bestselling book, MBA's Guide to Microsoft Excel, from which this short article is adapted. Nelson also writes and edits downloadable do-it-yourself incorporation kits that businesses and investors can use for setting up an Missouri incorporation or an Montana incorporation.
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