Financial Algebra – Chapter 1: Discretionary Expenses Vocabulary

A comprehensive set of vocabulary flashcards covering key statistical and financial terms from Chapter 1 of Financial Algebra (Discretionary Expenses).

asymptotic

When the ends of a plotted curve move away from the mean, they get closer and closer to the horizontal axis but never touch it.

bell curve

Another name for the normal curve.

bimodal

A set of data that has two modes.

bivariate data

A data set in which each element is an ordered pair of numbers.

causal relationship

A relationship in which one variable causes a change in another variable.

cell

The intersection of a column and row in a spreadsheet where data or labels are entered.

correlation

An association between two variables.

correlation coefficient

Represented by r; a number between −1 and 1, inclusive, used to judge the relationship between two variables.

cumulative frequency

A running total of all frequencies that are less than or equal to the frequency of a particular interval.

data

A set of numbers.

dependent variable

A variable whose value is determined by the value of the independent variable.

discretionary expense

Costs for goods or services that are nonessential.

dispersion

Single numbers used to represent the range of the numbers in a data set; also called a spread.

disposable income

What remains of income after taxes are deducted; used for essential and discretionary expenses.

domain

The set of all first elements (x-values) of ordered pairs.

essential expense

An expense that cannot be eliminated from daily life; includes rent, utilities, medical expenses, food, loan payments, etc.

explanatory variable

In a causal relationship, the variable that causes the change in another variable.

extraplotation

To predict corresponding variables outside of the domain.

frequency distribution

A table that lists each piece of data in the set and the number of times it appears.

gross income

A person’s income before all taxes are deducted.

independent variable

A variable that can take on any permissible value; does not depend on other variables.

index

A counter.

interpolation

To predict corresponding variables within the domain.

linear regression analysis

A method in which the equation of a line that best fits the points in a scatter plot is found.

linear regression equation

The equation of a line found using linear regression analysis; also called a line of best fit.

lurking variable

An external variable that can influence how variables are perceived to be related.

mean

The average; the sum of all the numbers divided by the number of elements in the data set.

measures of central tendency

Indicators such as mean, median, and mode designed to represent a typical value for the data.

median

The middle number when the data are arranged in ascending or descending order.

mode

The most often occurring value in a data set; there can be more than one mode or none; it need not be numerical.

normal curve

A bell-shaped graph in which areas under the curve represent percents of data; the total area equals 1 (100%).

normal distribution

A description of data that has the normal curve as its graph.

outlier

An extreme value in a data set; identified using 1.5 × IQR beyond Q1 or Q3.

percentile

A measure indicating what percent of the total frequency appears at or below a particular number.

percentile rank

The percentage of numbers that fall at or below a given number in the list.

range

The set of second elements (y-values) that correspond with a set of x-values (domain).

raw data

The actual numbers that, without any reference, are difficult to interpret.

relative cumulative frequency

The ratio of the cumulative frequency of an interval to the total number of data points collected.

response variable

In a causal relationship, the variable that is affected by the explanatory variable.

scatter plot

A graph that shows the relationship of bivariate data using points on a coordinate grid.

skewed data set

A data set in which the mean is not equal to the median.

spreadsheet

An electronic worksheet where data are entered into cells that can contain numbers, words, or formulas.

standard deviation

The square root of the variance; a measure of dispersion.

standard score

The number of standard deviations a value is from the mean; obtained by converting a raw score using the standard deviation.

statistics

Mathematics that deals with the collection, analysis, and interpretation of data.

subscript

Small numbers used to indicate position in a data set, such as naming quartiles or elements in a list.

tails

The ends of a curve.

trend

A relationship that exists between the two variables in a bivariate data set.

univariate data

A single set of numbers.

variance

The average of the squared deviations from the mean.

z-score

A score that expresses deviation from the mean in units of standard deviation; also called a standard score.