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Statistics for Finance

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Submitted By yudlee
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“Deciphering the constitution of a typical family using statistical indicators”
A random sample of 45 families was taken from the pool of 500 families from a city (Appendix 1). The weekly salary for this sample of families averaged at $431 with them spending around $115 or 31% of the weekly income on food. It is also quite apparent from this sample that families are still patriarchal with 75% (Appendix 2) of the sample families having Males as their head. Another interesting aspect of this sample is that only 4.4% of sample population are Graduates while half (55.6%) the sample population has only studied up to Primary School. (Appendix 2)

There is a positive correlation of 0.95 between Weekly Income (WI) and Weekly Expenditure on Food
(WEF). This means that a change in Income shall bring about a similar change in the expenditure on food as well. The way we see the data points (80% of the sample) bunched and scattered between the range of WI of 200-400 and just focus on this sub-data set; we would have a very low correlation of
0.32. This would mean that in this range the relation between the Income and Expenditure on Food is really low and there are other factors, which are influencing the expenditure on food.

The above data tells us that the small and large families are both spending almost the same amount on food per head each week as a portion of their income (21.4% and 22.9% respectively). However, the outlier here is the medium sized family (3-4), which is spending nearly 30% of their per head income on food. This amount tells us that there are factors other than family size which are impacting this group’ expenditure (This also ties in with the correlation deductions).

To understand the three areas of WI, WEF and FS of interest better we put the data into 5 buckets each.
78% of the sample is in the first bucket and are earning less

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