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Central Tendency

Central Tendency is the tendency of a given set of observations to cluster around a

Meaning single central or middle value and the single value that represents the given set of
observations is described as a measure of central tendency or, location, or average.

Definition the sum of all the observations divided by the number of

observations
Formula for ⋯
discrete 𝑥̅ = or
distribution
Formula for
frequency
𝑥̅ =
distribution N = Σ𝑓, 𝑥 = mid-point in case of grouped frequency distribution
Arithmetic
( )
Mean Deviation 𝑥̅ = 𝐴 + × 𝐶, where d =
Method
A = assumed mean, C = class length
→ If all the observations are constant, AM is also constant
→ the algebraic sum of deviations of a set of observations
from their AM is zero
Properties
→ AM is affected both due to change of origin and scale
̅ ̅
→ Combined Mean: 𝑥̅ =

Definition the middle-most value when the observations are arranged

either in an ascending order or a descending order of magnitude
For Discrete Step 1: Arrange data in ascending (or descending) order
Distribution
Step 2: Use the formula term

Step 1: Prepare a less than type cumulative frequency

distribution with Class boundaries as base.
For Frequency
Median (one Distribution Step 2: Calculate N/2 and check between which class
of the boundaries it falls. Mark LCB as 𝑙 and 𝑙 and corresponding
partition (refer example cumulative FD as 𝑁 and 𝑁
values) 15.1.6 – Page
15.8 Study Step 3: Apply the below formula
Mat)
−𝑁
𝑀𝑒 = 𝑙 + × 𝐶𝑙𝑎𝑠𝑠 𝑙𝑒𝑛𝑔𝑡ℎ
𝑁 −𝑁

→ Median is affected by both change of origin and scale

→ For a set of observations, the sum of absolute deviations
Properties
is minimum, when the deviations are taken from the
median.

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Meaning values dividing a given set of observations into a number of
equal parts
Median Median is also a quartile that divides the set of observations into
two equal parts.
Number of equal parts Four (4)
Quartiles Number of Quartiles Three (3)
Denoted by 𝑄 ,𝑄 ,𝑄

Number of equal parts Ten (10)

Deciles Number of Deciles Nine (9)
Denoted by 𝐷 ,𝐷 ,𝐷 ,…,𝐷

Partition
Values Number of equal parts Hundred (100)
Percentiles Number of Percentiles Ninety Nine (99)
Denoted by 𝑃 ,𝑃 ,𝑃 ,…,𝑃

(𝑛 + 1)𝑃 𝑡𝑒𝑟𝑚,
𝑃 Quartile 1 2 3
ℎ𝑒𝑟𝑒 𝑝 = , , ,
4 4 4
How to
calculate (𝑛 + 1)𝑃 𝑡𝑒𝑟𝑚,
𝑃 Decile 1 2 3 9
Partition ℎ𝑒𝑟𝑒 𝑝 = , , ,…,
Values 10 10 10 10
(𝑛 + 1)𝑃 𝑡𝑒𝑟𝑚,
𝑃 Percentile 1 2 3 99
ℎ𝑒𝑟𝑒 𝑝 = , , ,…,
100 100 100 100

Definition Mode is the value that occurs the maximum number of times.
Type of Mode A distribution can be uni-modal, bi-modal or multi-modal
𝑓 −𝑓
𝑀𝑜𝑑𝑒 = 𝑙 + × 𝐶𝑙𝑎𝑠𝑠 𝑙𝑒𝑛𝑔𝑡ℎ
Mode 2𝑓 − 𝑓 − 𝑓
For Frequency
Distribution Here,
𝑓 = 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 𝑜𝑓 𝑡ℎ𝑒 𝑚𝑜𝑑𝑎𝑙 𝑐𝑙𝑎𝑠𝑠,
𝑓 = 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 𝑜𝑓 𝑝𝑟𝑒 − 𝑚𝑜𝑑𝑎𝑙 𝑐𝑙𝑎𝑠𝑠,
𝑓 = 𝑓𝑟𝑒𝑞𝑢𝑒𝑛𝑐𝑦 𝑜𝑓 𝑡ℎ𝑒 𝑝𝑜𝑠𝑡 𝑚𝑜𝑑𝑎𝑙 𝑐𝑙𝑎𝑠𝑠

Empirical For a moderately skewed distribution,

Relationship 𝑀𝑒𝑎𝑛 – 𝑀𝑜𝑑𝑒 = 3 × (𝑀𝑒𝑎𝑛 – 𝑀𝑒𝑑𝑖𝑎𝑛)

For a given set of n positive observations, the geometric mean is

Definition
defined as the 𝑛 root of the product of the observations
Formula 𝐺 = (𝑥 × 𝑥 × 𝑥 … × 𝑥 ) /
Geometric → log 𝐺 = Σ log 𝑥
Mean
→ If all observations are constant GM is also constant
Properties → 𝐺𝑀 𝑜𝑓 𝑥𝑦 = 𝐺𝑀 𝑜𝑓 𝑥 × 𝐺𝑀 𝑜𝑓 𝑦
→ 𝐺𝑀 𝑜𝑓 =

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For a given set of non-zero observations, harmonic mean is
Definition defined as the reciprocal of the AM of the reciprocals of the
observation
𝑛
Formula 𝐻=
Harmonic Σ(1 𝑥 )
Mean
→ If all observations are constant HM is also constant
Properties → Combined HM:

In case of rates like speed, hours per HM is used

When to use
day, etc.
GM and HM
In case of % and ratios GM is used

Relationship General AM ≥ GM ≥ HM
between AM, When all the observations are same AM = GM = HM
GM and HM When all the observations are distinct AM > 𝐺𝑀 > HM

Best Measure – Overall AM

Best Measure for Open End Class Median
Ideal Measure Based on all observations AM, GM, HM
of Central Based on 50% values Median
Tendency Not affected by Sampling fluctuations Median
Rigidly defined, easy to comprehend AM, Median, GM, HM
No Mathematical Property Mode

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Dispersion

Dispersion for a given set of observations may be defined as the amount of

Definition deviation of the observations, usually, from an appropriate measure of central
tendency
Absolute These are with units and not useful for comparison of two
Measures of variables with different units. Example: Range, Mean
Dispersion Deviation, Standard Deviation, Quartile Deviation
Types of
These are unit free measures and useful for comparison of
Dispersion
Relative Measures two variables with different units. Example: Coefficient of
of Dispersion Range, Coefficient of Mean Deviation, Coefficient of
variation, Coefficient of Quartile Deviation

Definition Difference between the largest and smallest of observations.

Formula Range = L – S
Relative Coefficient of Range = × 100
Range Measure
→ No effect of change of origin but affected by change of
Properties scale in the magnitude (ignore sign).

Mean deviation is defined as the arithmetic mean of the

Definition absolute deviations of the observations from an appropriate
measure of central tendency
1
𝑀𝐷 = Σ|𝑥 − 𝐴|
Mean Formula 𝑛
Deviation Here A is mean or median as given in question
Relative Mean Deviation about A
Measure Coefficient of Mean Deviation =
A
× 100
→ No effect of change of origin but affected by change of
Properties
scale in the magnitude (ignore sign).

It is defined as the root mean square deviation when the

Definition
deviations are taken from the AM of the observations
Σ(𝑥 − 𝑥̅ ) Σ𝑥
Formula 𝑆𝐷 𝑜𝑟 𝜎 = 𝑜𝑟 − (𝑥̅ )
n 𝑛
Relative SD
Measure
Coefficient of Variation =
AM
× 100
| |
Standard For any two numbers, a and b SD =
Deviation Standard Result
(𝑛 − 1)
SD of first n natural numbers
12
→ If all the observations are constant, SD is Zero
→ No effect of change of origin but affected by change of
scale in the magnitude (ignore sign)
Properties of SD
2 2
𝑛1𝑠1 2+𝑛2𝑠22 +𝑛1𝑑1 +𝑛2𝑑2
→ Combined SD = 𝑛1 +𝑛2

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Definition It is defined as the semi-inter quartile range
𝑄 −𝑄
Formula 𝑄 =
Quartile 2
Deviation
Relative 𝑄3 −𝑄1
Measure
Coefficient of Quartile Deviation =
𝑄3 +𝑄1
× 100

Best Measure – Overall SD

Best Measure for Open End Class QD
Quickest to compute Range
Ideal Measure Not based on all observations Range
of Dispersion Difficult to comprehend and less Mean Deviation
Mathematical
Rigidly defined, easy to comprehend Mean Deviation, SD, QD
Not affected by Sampling fluctuations QD

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CORRELATION

Bi-Variate When data are collected on two discrete variables simultaneously,

ltaneously, they are known
Data as Bi-Variate data
Bi-Variate
Distribution of Bi--Variate data is called as Bivariate Distribution
Distribution
Meaning Freque
Frequency
ncy distribution involving two discrete variables.
Marginal If we make a separate distribution from bibi-variate
variate frequency
Distribution distribution where we take aggregate of only one variable at a
Bi-Variate
time. Total no. of marginal distributions = 2
Frequency
Conditional If we make a separate distribution from bi bi-variate
variate frequency
Distribution
Distribution distribution where we take one variable related one class
interval of another variable. Total no. of conditional
distributions = m + n (m = no. of rows, n = no. of columns)

While studying two variables at the same time, if it is found that

at the change in one
variable leads to change in the other variable either directly or inversely, then the
two variables are known to be associated or correlated.
correlated
Correlation
Positive Correlation If two variables move in the same direction
Negative Correlation If two variables move in the opposite direction
No Correlation If no change due to each other

A measurement or formula that represents the nature/ direction and/ and/or

magnitude of correlation.
Method Helps in obtaining
Scatter Diagram Only direction of correlation
Karl Pearson’s Product Direction as well as strength of correlation.
Measure of
moment correlation coefficient Best Method – Most accurate
Correlation
Spearman’s rank correlation
correla Direction as well as strength of correlation.
co-efficient Useful for attributes.
Co-efficient
efficient of concurrent Direction as well as strength of correlation.
deviations Only preferred for direction and not
magnitude. Quickest method.

Scatter
Diagram

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the ratio of covariance between the two variables to the
Defined as
product of the standard deviations of the two variables
𝐶𝑜𝑣(𝑥, 𝑦)
Main Formula 𝑟 =
𝜎 .𝜎

Formula for Σ(𝑥 − 𝑥̅ )(𝑦 − 𝑦) Σ𝑥𝑦

Covariance 𝐶𝑜𝑣(𝑥, 𝑦) = 𝑜𝑟 − 𝑥̅ . 𝑦
𝑛 𝑛
Karl Pearson’s Formula for Standard Σ(𝑥 − 𝑥̅ ) Σ𝑥
Product moment Deviation 𝜎 𝑜𝑟 𝜎 𝜎 = 𝑜𝑟 − (𝑥̅ )
correlation coefficient n 𝑛

→ It is a unit-free measurement
→ Value of r lies from -1 to +1 both inclusive
→ Change of origin or Scale
Properties Change of Origin No impact
Change of Scale No impact of value, but if change of
scale of both variables are of different
sign then sign r will also change

find the level of agreement (or disagreement) between

Applied to two judges so far as assessing a qualitative
characteristic is concerned
2
6Σ𝑑
Main Formula 𝑟 = 1− , here d means difference in ranks
Spearman’s 𝑛 𝑛2 −1
Rank
Correlation coefficient Adjustment Value in Σ here t is a tie length and we need to do
case of Tie Rank
summation of all ties
Formula in case of Tie ( )
length
𝑟 = 1− ( )

A very simple and casual method of finding correlation

Use when we are not serious about the magnitude of the
two variables
This method involves in attaching a positive sign for a x-value
(except the first) if this value is more than the previous value
and assigning a negative value if this value is less than the
Steps in this method
Co-efficient of previous value. Applies to both variable and then these signs
concurrent are compared. If signs match – pair is counted as concurrent
deviations deviation.
2𝑐 − 𝑚
𝑟 = ± ±
𝑚
Formula
Here, m = total no. of deviations (it is one less than total
no. of pairs under observation i.e m=n-1), c = no. of
concurrent deviations, 𝑟 also lies between -1 and 1 incl.

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REGRESSION

Regression Estimation of one variable for a given value of another variable on the basis of an
Analysis average mathematical relationship between the two variables
Line Regression line of Y on X
Estimation of Y Regression
Regression Coefficient of Y on X denoted by 𝒃𝒚𝒙
(when it is Coefficient
dependent on X) 𝒀 − 𝒀 = 𝒃𝒚𝒙 (𝑿 − 𝑿),
Form
𝑋 𝑎𝑛𝑑 𝑌 𝑎𝑟𝑒 𝑚𝑒𝑎𝑛𝑠 𝑜𝑓 𝑋 𝑠𝑒𝑟𝑖𝑒𝑠 𝑎𝑛𝑑 𝑌 𝑠𝑒𝑟𝑖𝑒𝑠

Line Regression line of X on Y

Estimation of X Regression
Regression Coefficient of X on Y denoted by 𝒃𝒙𝒚
(when it is Coefficient
dependent on Y) 𝑿 − 𝑿 = 𝒃𝒙𝒚 (𝒀 − 𝒀),
Form
𝑋 𝑎𝑛𝑑 𝑌 𝑎𝑟𝑒 𝑚𝑒𝑎𝑛𝑠 𝑜𝑓 𝑋 𝑠𝑒𝑟𝑖𝑒𝑠 𝑎𝑛𝑑 𝑌 𝑠𝑒𝑟𝑖𝑒𝑠

When linear relationship exists The linear equation so arrived can be

between two variables (i.e. correlation used both ways for Y on X and X on Y.
is perfect, 𝑟 = −1 𝑜𝑟 + 1) It means regression lines are identical.
When no linear relationship exist In that case, we need to estimate the
between two variables regression lines with the help of
Important
Theory Points
Method of Least Squares
To derive regression line of y on x The minimisation of vertical distances
in the scatter diagram is to be done
To derive regression line of x on y The minimisation of horizontal
distances in the scatter diagram is to
be done
Covariance between two variables
Defined as the ratio of
Variance of Independent variable
( , )
Regression Regression Coefficient of Y on X 𝑏 = 𝑟. or 𝑏 =
Coefficient
( , )
Regression Coefficient of X on Y 𝑏 = 𝑟. or 𝑏 =

r used here is Karl Pearson’s Correlation Coefficient

Change of origin The regression coefficients remain
unchanged
Change of scale : If original pair is X, Y and modified
pair is U, V where

Properties of
U= and V = , then
Regression lines 𝑝
and coefficient 𝑏 =𝑏 , 𝑏𝑢𝑣 = 𝑏𝑥𝑦
𝑞
Intersection of two regression lines Two regression (if not identical) will
intersect at the point (𝑥̅ , 𝑦) [means]
Relation between correlation and
𝑟 = ± ±𝑏 ×𝑏
regression coefficients
𝑏 ,𝑏 𝑎𝑛𝑑 𝑟 all will have same sign

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Coefficient of Determination 𝑟 (square of correlation coefficient)
It explains the percentage of variation
Interpretation of value of 𝑟 in dependent variable due to variation
Coefficient of in independent variable
Determination It means 64% of variation in x is due
Example: if 𝑟 = 0.8, 𝑡ℎ𝑒𝑛 𝑟 = 0.64 to variation in y and remaining 36%
due to other factors. It shows the
reliability of correlation coefficient.

Formula Probable Error [P.E] = 2 3 × Standard Error [S.E.]

1−𝑟
Standard Error
√𝑛
Use Probable Error is used to test the reliability of r
Probable Error
If r is less than PE The value of r is not
significant. Not reliable
Test If r is greater than six The value of r is
times of PE significant and there is
evidence of correlation

TIME VALUE OF MONEY

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→ The sum of money received in future is less valuable than it is today

→ Rs. 100 Note given today is more valuable than Rs. 100 note given a year
later due to various reasons:
Risk Factor Risk that payer will not give money
Liquidity Cash given today will be immediately available for
Basics
Preference spending, hence more valuable
Inflation In general, as the time goes on purchasing power of
the money gets reduced
Opportunity Cash given today could be invested to a better
Cost investment that could appreciate its value

Name of Parties Treatment of Interest

Partied
Lender Income
involved in
Borrower Expense
Financial
Investor Income
Transaction
Investee Expense

𝑷. 𝒓. 𝒕
Formula 𝑺. 𝑰. =
𝟏𝟎𝟎
Simple P Principal means amount of money invested or loan taken
Interest r Rate of simple interest per annum
t Time of loan / investment in years
Accumulated Amount under SI = Principal + Simple Interest
Amount under SI (amount is also called as Balance)

Simple Interest Compound Interest

→ Interest earned is withdrawn → Interest earned is not
every time it is earned withdrawn till maturity
Compound
→ No re-investment of interest → Re-investment of interest
Interest vs.
earned in earlier periods earned will be done
Simple
Interest → Amount includes Principal and → Amount includes Principal and
Interest on that Principal Interest on that Principal and
interest on interest earned in
the earlier periods

Meaning The rate of interest stated in question does not

always mean that effectively interest charged/
received will be same % when compared at annual
level. Effectiveness depends on Compounding.
Effective Rate Higher the compounding
of Interest Higher the effective rate for the year
for a rate of interest
Formula 𝐸 = [(1 + 𝑖 ) − 1]
here n means no. of periods in one years
n considering the compounding

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It means no. of times interest is compounded in a year or no.
of conversions in a year. Compoundingg means calculation of
interest by bank. For e.g.

Conversion Period Compounding Frequency

Compounding
Yearly 1
Frequency and
Half-yearly 2
Conversion
Quarterly 4
Periods Monthly 12
Daily 365
While calculating compound interest, we need to adjust
interest rate and time period using compounding frequency.

Formula for
Accumulated 𝑨 = 𝑷(𝟏 + 𝒊)𝒏
Amount of CI
A Accumulated amount as per CI
P Principal means amount of money invested or loan taken
Compound Interest rate (adjusted as per compounding) e.g.
Interest If rate of interest given is r=10% and if compounding is half-
half
i %
yearly, 𝑖 = = 5% = 0.05

It means no. of periods (not necessarily no. of years). It

depends on type of compounding. E.g. if compounding is
n quarterly and t = 2 years, it means we will have 2×4 = 8 no.
of periods. n=8
Example: P=1000, i = 10%, n=3 then
Shortcut in
Calculator Steps: Write P i.e 1000 then press
calculator to
calculate amount + 10 % + 10 % + 10 % (three times because n=3)

Direct Formula of Example: P=1000, i = 10% = 0.1, n=3 then

Calculator Steps: 1 + 0.1 × = = (firstst equal will be considered
Amount in
Calculator as power 2, second as 3 and so on) × 1000 (Principal
(Principal)

𝐴 = 𝑃 + 𝐶𝐼 ⇒ 𝐶𝐼 = 𝐴 − 𝑃
How to calculate
𝐶𝐼 = 𝑃(1 + 𝑖) − 𝑃
CI?
𝐶𝐼 = 𝑃[(1 + 𝑖) − 1]

Definition → Sequence of periodic payments (installment)

→ Same amount
→ Regularly
Annuity
→ For a specified period of time
Annuity Regular Installment commencing from the end of the period
Annuity Due Installment commencing from the beginning of the period
Future value is the cash value of an investment at some time in the
t future. It is
Future Value
tomorrow’s value of today’s money compounded at the rate of interest.
Present Value Present
resent value is today’s value of tomorrow’s
tomorrow’s money discounted at the interest rate.

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Meaning Payment / Receipt one time at the beginning. No

other payment/ receipt till maturity
Formula of
𝐹𝑉 = 𝑃𝑉 (1 + 𝑖)
Future Value
Single cash Formula for 𝐹𝑉
flow Present Value 𝑃𝑉 =
(1 + 𝑖)
Both the above formulas are similar to formula of
Remark Amount of compound interest. Principal is taken as
PV and Amount is taken FV

𝐹𝑉𝐴 = 𝐴 × [𝐹𝑉𝐴𝐹(𝑛, 𝑖)]

(1 + 𝑖) − 1
Formula for FV of Annuity Regular 𝐹𝑉𝐴 = 𝐴
𝑖
Future value of
Annuity A = amount of installment or Annuity
𝐹𝑉𝐴 𝐷𝑢𝑒 = 𝐹𝑉𝐴 × (1 + 𝑖)
Formula for FV of Annuity Due Calculate FVA regular normally and then
multiply it by (1 + 𝑖)

𝑃𝑉𝐴 = 𝐴 × [𝑃𝑉𝐴𝐹(𝑛, 𝑖)]

(𝟏 + 𝒊)𝒏 − 𝟏
𝑷𝑽𝑨 = 𝑨𝑰
𝒊(𝟏 + 𝒊)𝒏

Formula for PV of Annuity Regular or

𝑨𝑰 𝟏
𝑷𝑽𝑨 = 𝟏−
Present Value 𝒊 (𝟏 + 𝒊)𝒏
of Annuity
A = amount of installment or Annuity

PVA Regular for one shorter period

Formula for PV of Annuity Due
+ Initial Cash low

Calculator Trick of PVAF (Present

1 + 𝑖 ÷ = = … … 𝑛 𝑡𝑖𝑚𝑒𝑠 GT
Value Annuity Factor)

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Particulars Application Remark
Future Value of
Annuity is the Sinking fund means a fund created for
amount which is specific purpose where a big amount of
required in future
Sinking money is required at any specific point in
and annuity
Fund amounts are the future. An annuity is set aside and invested
regular savings so that it will mature on that specific date
required for giving the required amount.
creation of fund
Present Value of Owner of Asset, who gives
Annuity (Lease Lessor asset on rent. Lease Rentals
Rentals) are are income for Lessor
Leasing compared with User of the asset who has
Asset Cash down Lessee taken asset on rent. Lease
price Rentals are expense for Lessee
Present value of
Expenditure on capital
Applications Capital
Capital savings and benefits assets in anticipation of
of Time Value Expenditure
Expenditure are compared with future benefits
of Money Contribution from sales
or purchase value of
Investment asset, to decide Future and other benefits or
Decision whether asset to Benefits savings derived from a
purchase or not capital investment
It is a debt security. Type of
Bond loan taken by company from
public. Like debentures
Value written on the
Present value of Face document of bond. This value
interest income and
Valuation of Value is used to calculate Interest
maturity value is
Bond compared with the
Amount
issue price of bond Issue Actual payment made to
Price purchase the bond
Amount to be received on
Maturity
redemption or maturity of
value
bond

Meaning An annuity that continues till infinite period of time is called as

Perpetuity.
Formula 𝐴𝐼
Perpetuity Present Value of Perpetuity =
Perpetuity 𝑖
Formula 𝐴𝐼
Growing Present Value of Growing Perpetuity =
(𝑖−𝑔)
Perpetuity g is constant growth rate

Net Present NPV = Present Value of Cash Inflows – Present Value of Cash Outflows
Value If NPV ≥ 0, accept the proposal, If NPV < 0, reject the proposal
Nominal Rate
Real Rate of Return = Nominal Rate of Return – Rate of Inflation
of Return
Compounded Annual Growth rate is the interest rate we used in Compound
CAGR
Interest. It is used to see returns on investment on yearly basis

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RATIO

Meaning of Ratio Division of two quantities a and b of same units. Denoted by a:b
Inverse Ratio b:a is inverse ratio of a:b
Compound Ratio Compound ratio of a:b and c:d is ac:bd
Duplicate Ratio Duplicate ratio of a:b is a2:b2
Sub-duplicate Ratio Duplicate ratio of a:b is √𝑎:√𝑏
Triplicate Ratio Triplicate ratio of a:b is a3:b3
Sub-triplicate Ratio Triplicate ratio of a:b is √𝑎 :√𝑏
Commensurate If ratio can be expressed in the form of integers
Incommensurate If ratio cannot be expressed in the form of integer
integers
Continued Ratio Ratio of three or more quantities e.g. a:b:c

PROPORTION

Proportion a,b,c,d are in proportion if a:b = c:d [it is an equality of two ratios]
Term/ Proportional first = a, second = b, third =c, fourth = d
Mean Proportional In a continued
contin proportion a:b=b:c, b2=ac, b is called mean proportional
Cross Product Rule If a:b=c:d, then ad = bc
Invertendo If a:b=c:d, then b:a = d:c
Alternendo If a:b=c:d, then a:c = b:d
Componendo If a:b=c:d, then (a+b):b = (c+d):d
Dividendo If a:b=c:d, then
t (a−b):b = (c−d):d
Componendo and (a+b):(a−b) = (c+d):(c−d) or (a−b):(a+b) = (c−d):(c+d)
If a:b=c:d, then (a+b):(a−b)
Dividendo
Addendo If a:b = c:d = e:f = ……. = k, then also (a+c+e+……):(b+d+f+….) = k

INDICES

Index / Indices Here in 42, 4 is base and 2 is power

er or index. Plural of index is indices
Basic 1 a0 = 1, any number raised to power zero equals to 1
Basic 2 √𝑎 = a1/2, √𝑎= a1/3
Law 1 am × an = a(m+n)
Law 2 am / an = a(m−n)
Law 3 𝑎( ) = am×n = (𝑎 )
Law 4 (ab)n= anbn

LOG

Basic If 24=16 [2 is base, 4 is power], then log 16 = 4 (i.e log of 16 base 2)

How to remember? 2 should be raised to what power so that it becomes 16
2 ka kitna power karne wo 16 ho jaye, ans is 4
Standard Result log 𝑎 = 1
1, log 1 = 0
Law 1 log (𝑚𝑛)) = log 𝑚 + log 𝑛
Law 2 𝑚
log ( ) = log 𝑚 − log 𝑛
𝑛
Law 3 log 𝑚 = 𝑛 log 𝑚
Change of Base log 𝑚 =
EQUATIONS - BASICS
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Equation Means mathematical statement of equality
Identity Equation If equality is true for all the values of variable, ex. 2𝑥 + 3 = 𝑥 + 𝑥 + 3
Conditional Equation If the equality is true for certain value of the variable ex. 2𝑥 + 1 = 3
Solution or Root It is the value of variable that satisfies the equation
Degree Highest power of variable in equation

SIMPLE EQUATION

Linear equation with Linear equation with Quadratic Cubic

Type
one unknown two unknowns Equation Equation
𝑎𝑥 + 𝑏𝑥 + 𝑐 = 0
𝑎𝑥 + 𝑏 = 0, where a 𝑎𝑥 + 𝑏𝑦 + 𝑐 = 0 𝑎𝑥 + 𝑏𝑥
Form a,b,c are constants
and b are constants a,b,c are constants + 𝑐𝑥 + 𝑑 = 0
with a≠0
Degree 1 (One) 1 2 3
Roots 1 (One) 1 each for both 2 (α, β) 3
Need minimum two Trial Error/ Trial and
Remarks NA
equations to get roots Formula based Error
Methods 1. Elimination −𝑏 ± √𝑏 − 4𝑎𝑐
NA NA
for solution 2. Cross Multiplication 2𝑎

LINEAR EQUATIONS WITH TWO UNKNOWNS

Elimination Eliminate one variable by algebraic operations on given equations, and

then calculate the value of variable that remains. Using this value, find
out the value of other root.
Cross Multiplication 𝑎 𝑥+𝑏 𝑦+𝑐 = 0,𝑎 𝑥+𝑏 𝑦+𝑐 = 0
Solution is given by:
= =

QUADRATIC EQUATION

−𝑏 ± √𝑏 − 4𝑎𝑐
Formula
2𝑎
b coef icient of 𝑥
Sum of Roots α+β= − =
a coef icient of 𝑥
c constant term
Product of Roots α×β = =
a coef icient of 𝑥
How to construct a
𝑥 − (sum of roots: α + β)𝑥 + Product of Roots: α × β = 0
quadratic equation
Condition Nature of Roots
𝑏 − 𝑎𝑐 = 0 Real and Equal (α=β)
𝑏 − 𝑎𝑐 > 0 Real and Unequal
Nature of Roots
𝑏 − 𝑎𝑐 < 0 Imaginary
𝑏 − 𝑎𝑐 is a perfect square Real, Unequal and Rational
𝑏 − 𝑎𝑐 > 0 but not perfect square Real, Unequal and Irrational

Irrational Roots If one root is (𝑚 + √𝑛), then other root will be (𝑚 − √𝑛)
MATRICES

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Matrix A rectangular array of numbers (real/complex) with m rows and n columns
Order of Matrix Order is m × n where m= no. of rows and n = no. of columns
Row Matrix Matrix having only one row [1 4 2]
1
Column Matrix Matrix having only one column 4
2
0 0
Zero/ Null Matrix If all the elements of matrix (any order) are zero
0 0
1 3
Square Matrix If in a matrix, no. of columns = no. of rows
9 2
Rectangular 1 3 2
If in a matrix, no. of columns ≠ no. of rows
Matrix 9 2 5
Leading Diagonal Diagonal elements starting from top left to bottom right
A square matrix where all the elements except leading diagonal elements are
1 0 0
Diagonal Matrix
zero. 0 2 0
0 0 3

2 0 0
Scalar Matrix A diagonal square matrix where all the leading elements are equal 0 2 0
0 0 2

1 0 0
Unit Matrix A scalar matrix whose leading diagonal elements are equal to 1 0 1 0
0 0 1

3 4 5
Upper Triangle
A matrix whose all the elements below the leading diagonal are zero 0 1 9
Matrix
0 0 5

3 0 0
Lower Triangle
A matrix whose all the elements above the leading diagonal are zero 5 1 0
Matrix
2 8 5

The matrix obtained by deleting one or more rows or columns or both of a

Sub Matrix
matrix is called its sub matrix.
Two matrices are are equal matrices if order of both is same and corresponding
Equal Matrices
elements are same
Addition/ All the corresponding elements will be added/ subtracted to make a new
Subtraction matrix. (only possible when both matrix are of same order)
Properties of
a. A+B = B+A [Commutative], b. (A+B)+C = A+(B+C) [Associative], c. k(A+B) =
Addition/
kA + kB, k is constant
Subtraction
Multiplication of two matrices is possible only when no. of columns of first
Multiplication matrix = no. of rows of second matrix. [To understand how to do multiplication
– refer page 2.40 Example 3]
a. In general, A×B ≠ B×A, b. (A×B)×C = A×(B×C) if defined, c. A(B+C) = AB + AC
Properties of
also, (A+B)C= AC+BC, d. if AB = AC then B≠C in general, e. A×O = O [O means
Multiplication
null matrix], f. A×I = IA = O [I means Unit Matrix],
Transpose of a A matrix obtained by changing rows and columns of a matrix A is called as
Matrix Transpose Matrix of A. It is denoted by - AT or A’

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Properties of
a. A = (A’)’ b. (A+B)’ = A’ + B’ c. (KA)’=K.A’ d. (AB)’=B’×A’
Transpose
Symmetric
If after transposing also there is no change in matrix. A’=A
Matrix

Skew Symmetric If after transposing a matrix, it becomes its negative. A’=−A

DETERMINANTS

Determinants It is a valuation of a matrix using some rules. It only applies for square matrix

Denote It is denoted by det A or | A | or Δ

2 × 2 Matrix
𝑎 𝑏
= (𝑎𝑑 − 𝑏𝑐)
𝑐 𝑑
𝑎 𝑎 𝑎
3 × 3 Matrix 𝑏 𝑏 𝑏 = a1(b2c3-b3c2)-a2(b1c3-b3c1)+a3(b1c2-b2c1)
𝑐 𝑐 𝑐
M =Minor of the element located in ith row and jth column. It is equal to
Minor
determinant of sub matrix obtained after ith row and jth column
Cofactor Cij = (-1)i+j Mij
3 × 3 Formula
using Cofactors 𝑎 𝑐 +𝑎 𝑐 +𝑎 𝑐

a. Δ remains unaltered if its rows or b. Δ change its sign if two rows or

columns are interchanged. columns interchanges
c. If any two rows or columns of a d. If each element of matrix is
determinant are identical, then Δ =0 multiplied by constant k , Δ will also
Properties get multiplied by k
e. If some or all of the elements of a f. Δ will remain same if equi-multiple
row or column of a determinant are of any row or column is added to
expressed as sum, then Δ is each element of any row or column
expressed as sum of Δs

Singular Matrix if det A = 0, then singular matrix otherwise non-singular matrix

Adjoint Matrix Adjoint of A Matrix is the transpose of the Cofactor Matrix
𝟏
Inverse Matrix If A is a square matrix, and det A ≠ 0 (non-singular), then A-1 = × Adj. A
|𝐀|
Cramer’s rule to
find solution of 𝑥= ,𝑦 = ,𝑧 = , provided Δ≠0 [Δ𝑥 means determinant of matrix
linear eq. in 3
by replacing first column of matrix with RHS values of equations] See Example
variables
a. If Δ≠0, the system has b. If Δ=0 and atleast one of 𝛥𝑥, 𝛥𝑦, 𝛥𝑧 ≠0, then
unique solution system has no solution and it is inconsistent
Properties of
c. If Δ=0 and all of 𝛥𝑥, 𝛥𝑦, 𝛥𝑧 ≠0, then system may or may not have solution,. If
Cramer’s
it has solution, equations are dependent and there will be infinite no. of
solutions. If it doesn’t have solution, equations are inconsistent.
SET

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Set means Collection
ollection of well
well-defined distinct objects.. It is usually denoted by capital
cap letter
Element Each object of set is called as element. It is usually denoted by small letter
Braces Form When set shown as a list of elements within braces { } e.g. A = {1,3,5,7}
Descriptive Form Set can be presented in statement form e.g. A = set of first four odd numbers
Here Set is written in the algebraic form in this format –
Set-Builder or
{𝑥: 𝑥 satis ies some properties or rule}.. The method of writing this form is
Algebraic form
called as Property or Rule method
It is denoted by ‘∊’, a ∊ A means that element a is one of the element of Set A. ∉
Belongs to
used for do not belongs to.
Set A is a subset of Set B if all the elements of Set A also exist in Set B. It is
Subset
denoted as - A A⊂B
Proper Subset A is a proper subset of B if A is a subset of B and A A≠B
Improper Subset Two equal sets are improper subsets of each other
Null Set A set having no eleelements
ments is called as Null or Empty Set. It is denoted by ϕ
No. of subsets Formula: no. of subsets = 2n, no. of proper subsets = 2n-1
Intersection Intersection set of A and B is a set that contains common elements between
denoted by [A∩B] both of the sets
Union Union set of A and B is a set that contains all the elements contained in both the
denoted by [A∪B] sets without repeating the common elements
The set which contains all the elements under consideration in a particular
Universal Set
problem is called
lled the universal set generally denoted by S
A complement set of set P is a set that contains all the elements contained in
Complement Set
the universe other than elements of P. It is denoted by P’ or Pc
A-BB is a set that contains elements of A other than those which are common in
Set (A-B)
A and B. [A-B B = A - A∩B]
∪Q)’ = P’∩Q’
1. (P∪Q)’
De Morgan’s Law
2. (P∩Q)’
∩Q)’ = P’∪Q’

S
Universal
Set

Union Set
A B
A
A∪B

Venn Diagrams

Intersection
A B
Set A
A∩B

Set A
A-B A B

2 sets – Formula n(A∪B) = n(A) + n(B) – n(A∩B)

3 sets – Formula ∪B∪C) = n(A) + n(B) + n(C) – n(A∩B) –n(B∩C) –n(C∩A)
n(A∪B∪C) ∩A) + n(A∩B∩C)

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A or B , atleast A or B, either A or B A∪B
Venn Diagram A and B, Both A and B A∩B
related some Only A means A−B
basics Only B means B−A
Neither A nor B (A∪B)’
Cardinal Number No. of distinct elements contained in a finite Set A is called Cardinal Number.
For Set A = {4,6,8,3}, cardinal no. n(A) = 4
Equivalent Set Two sets A and B are equivalent sets if n(A) = n(B)
Power Set Collection of all possible subsets of a given set A is called Power set of Set A. It
is denoted by P(A)
Ordered Pair Pair of two elements both taken from different Sets. E.g. if a∊A and b∊B then
ordered pair is (a,b) where first element will always from A and second always
from B in every pair
Product of Sets Also called as Cartesian Product. If A and B are two non-empty sets, then set of
all the ordered pairs such that a∊A and b∊B is called as Product Set. It is
denoted by A×B. [A×B = {(a:b): a∊A and b∊B}]
Why Product? n(A×B) = n(A) × n(B) i.e. cardinal no. of product set is equal to product of
cardinal no. of each set

FUNCTION

Relation Any subset of product set is called A×B is said to define relation from A to B.
It’s any collection of ordered pairs taken from a product set.
Function (set A relation where no ordered pairs have same first elements is called Function.
based definition) First element of the ordered should not be repeated in the relation set. (a,b) all
a should be unique for different values of b
Function (non set A rule which associate all elements of A to B is called function from A to B. It is
based definition) denoted by 𝑓: 𝐴 → 𝐵 or 𝑓(𝑥) of B
Image, Pre-image 𝑓(𝑥) is called the image of 𝑥 and 𝑥 is called the pre-image of 𝑓(𝑥)
Pre-image is input and Image is output
Domain, Co- Let 𝑓: 𝐴 → 𝐵, then A is called domain of f and B is called the co-domain of f.
domain, Range Set of all the images (contained in B) of pre-images taken from A is called
Range. Domain is a set of all pre-images and Range is a set of all images. Also
Range is a subset of Co-domain.
Types of Let 𝑓: 𝐴 → 𝐵, if different elements in A have different images in B
One-One
Functions Function then f is one-one or injective function or one-one mapping
Onto Let 𝑓: 𝐴 → 𝐵, if every element in B has at least one pre-image in
Function A, then f is an onto or surjective function
Into Let 𝑓: 𝐴 → 𝐵, if even a single element in B is not having pre-image
Function in A, then it is said to be into function
Bijection If a function is both one-one and onto it is called as Bijection
Function Function
Identity If domain and co-domain are same then function is identity
Function function Let 𝑓: 𝐴 → 𝐴 𝑎𝑛𝑑 𝑓(𝑥) = 𝑥
Constant If all pre-images in A will have a single constant value in B then
Function the function is constant function
Equal Function Two functions f and g are said to be equal function if both have same domain
and same range
Inverse Function Let 𝑓: 𝐴 → 𝐵, is a one-one and onto function. Every value of 𝑥 (preimage)will
give unique image 𝑓(𝑥) using f. If there is a function that takes value of images
as input and gives pre-images as output, such function is called inverse

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function. It is denoted as 𝑓 : 𝐵 → 𝐴.

Composite A function of function is called composite function. Example: if

Function 𝑓 𝑎𝑛𝑑 𝑔 are functions, then 𝑓[𝑔(𝑥)]𝑎𝑛𝑑 𝑔[𝑓(𝑥)]are composite functions. Also
called as 𝑓𝑜𝑔 𝑜𝑟 𝑔𝑜𝑓

RELATION

Relations Any subset of product set is called A×B is said to define relation from A to B.
It’s any collection of ordered pairs taken from a product set.
Domain and If R is a relation from A to B, then set of all first elements of ordered pairs is
Range domain and set of all second elements of ordered pairs is range.
Reflexive If S is a universal set, S = {a,b,c …} then R is a relation from S to
S. If this R contains all the ordered pairs in the form (a,a) in
S×S, then it is a reflexive relation
Types of Relation Symmetric If (a,b) ∊ R, then if (b,a) ∊ R then R is called Symmetric
Transitive If (a,b) ∊ R and also (b,c) ∊ R, then if (a,c) ∊ R such relation is
Transitive. [ if in a relation only (a,b) is present but (b,c) is not
present we will consider it as transitive relation]
Equivalence If a relation is Reflexive, Transitive and Symmetric as well, then it is called as
Relation Equivalence Relation

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Permutations and Combinations

Multiplication Rule If one thing can be done in ‘m’ ways and when it has
AND → Multiply been done, another thing can be done in ‘n’ different
Fundamental ways then the total number of ways of doing both the
Principles of things simultaneously = m × n
Counting Addition Rule If two alternative jobs can be done in ‘m’ and ‘n’ way
OR → Add respectively then either of the two jobs can be done
in (m+n) ways
It is written as n! or  𝑛⌋ = 𝑛(𝑛 − 1)(𝑛 − 2) … 3 × 2 × 1
Factorial
0! = 1, 1! = 1, 2! = 2×1, 3! = 3×2×1, 4! = 4×3×2×1
Permutations It is the ways of arranging or selecting things from a group of things with due
means regard being paid to order of the arrangement or selection.
Arranging three persons A,B,C for a group photograph can be done as {ABC,
Basic Example 1
ACB, BAC, BCA, CAB, CBA}, thus total no. of ways is 6
Selecting two persons as Winner and Runner-up for a contest having 4
participants P,Q,R,S can be done as {PQ, PR, PS, QP, QR, QS, RP, RQ, RS, SP, SQ,
Basic Example 2
SR}, thus total no. of ways is 12 (here in the set of arrangement first element is
winner and second is runner up)
Theorem for The number of permutations of n things chosen r at a time is given by
!
Permutations 𝑃 = 𝑜𝑟 𝑛(𝑛 − 1)(𝑛 − 2) … (𝑛 − 𝑟 + 1)
!
! × × × ×
𝑃 = ( )!
= ×
= 5 × 4 × 3 = 60
Basic Example 3 Or simply here r = 3, so do reverse multiplication of 5 up to three terms so it
will be 5×4×3 = 60
We are able to find no. of ways manually also (as done in Basic Example 1 and
2) but that is easy for lower values of n and r. When there is a higher value of n,
Use of Theorem
manually creating the set of arrangements will be tedious which requires the
need of this theorem. Check Basic Example 1 and Example 2 using theorem
! ! ! !
Why 0! = 1 𝑃 =( = also, 𝑃 = 𝑛! , thus = 𝑛! , 0! = =1
)! ! ! !

Special Formula (𝑛 + 1)! – 𝑛! = 𝑛. 𝑛! (for proof – refer Example 10 Study Mat Page 5.6)
Type Remark
Calculate No. of words using letters Simple 𝑃 Note: Meaning of words
of a particular word has no relevance
Group Photograph 𝑃
Question Patterns Rank Awards first, second, third etc. 𝑃 here r is no. of ranks
with remarks Theorem based questions, Directly apply theorem
calculation of n or r with the given
data
Selection of different unique 𝑃 here r is no. of unique
designations/ positions from a group designations/ positions
of persons

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Circular Above discussion was relevant for things that are arranged in a row. However
Permutations when the things are arranged in a circle, the permutation is termed as circular.

Theorem:
The number of circular permutations of n different things chosen all at a time
Circular
is (n–1)!
Permutations
number of ways of arranging n persons along a round table so 𝟏
(𝒏 − 𝟏)!
that no person has the same two neighbors is 𝟐
Standard Results
the number of necklaces formed with n beads of different 𝟏
(𝒏 − 𝟏)!
colors 𝟐

Theorem 1 Number of permutations of n distinct objects taken r at a time

Permutation with when a particular object is not taken in any arrangement is
Restrictions ( )
Note: These two 𝑃
theorems are useful for
formula based questions. Theorem 2 Number of permutations of r objects out of n distinct objects
For practical questions when a particular object is always included in any
we will use logic. ( )
(explained in example) arrangement is 𝑃( )

Requirement of Que. Tips

Calculate permutation In that case consider that group of objects as
when two or more 1 object for the purpose of 𝑃 formula,
objects are always then multiply factorial of no. of objects in
together the group
Calculate permutation Step 1: Calculate the no. of ways without
when two or more restriction using 𝑃
Some tips useful
objects will never Step 2: Calculate Permutation of 2 or more
while solving
come together thing always together (as per above point)
problems having
restrictions Step 3: Result of Step 1 – Result of Step 2
When there are two In that case, that particular group of objects
types of objects and can be arranged in the alternate places as a
ask is to calculate the neighbor of each object of other category
ways in which no two Refer Example 10 Study Mat Page 5.13SS
objects of one the
category will be
together

Permutations when some of the 𝑛!

𝑝=
things are alike, taken all at a time 𝑛 !×𝑛 !×𝑛 !
Standard Results Permutations when each thing may
be repeated once, twice, upto r times 𝑛
in any arrangement.

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The number of ways in which smaller or equal number of things are arranged
Combinations or selected from a collection of things where the order of selection or
arrangement is not important, are called combinations. It is just a GROUPING
Grouping of two persons out of three persons A,B,C for a group photograph can
be done as {AB, BC, AC}, thus total no. of ways is 3. Here AB and BA are same
Basic Example 1
group and will be counted once only, even though the sequence is not same.
Sequence has no relevance while finding combinations.
Selection of persons for a committee of 2 out of total 4 applicants P,Q,R,S can be
done in {PQ, QR, RS, PS, PR, QS} – total 6 ways. Here we used combinations
Basic Example 2
because in the committee of two there is no designations all are same so
sequence of selection does not matter.
Theorem of !
Combinations 𝐶 = or 𝐶 =
!( )! !

Standard Results 𝐶 =1 , 𝐶 =1
Complimentary
Combinations
𝐶 = 𝐶( ) example: 𝐶 = 𝐶
𝒏 𝟏 𝒏
𝑪𝒓 = 𝑪𝒓 + 𝒏𝑪𝒓 𝟏
Memorize:
Special Formulas
Combination of (n+1) things when one thing is always included [ 𝐶 ]+
Combination of (n+1) things when one thing is always excluded [ 𝐶 ]
𝒏 𝒏 𝟏
Permutation 𝑷𝒓 = 𝑷𝒓 + 𝒓. 𝒏 𝟏𝑷𝒓 𝟏
Special formula Memorize in the same way as above

Combinations of n different things 𝟐𝒏 – 𝟏 [1 is subtracted because we are

Standard Results
taking some or all of n things at a time removing all rejection case]

Type Remark
Different pocker hands When we play Poker, Teen Patti etc. only group of
in a pack of cards 5 cards, sequence in which it is picked does not
matter hence we take combinations
Formation of triangles We need three vertices to make a triangle. Now
when vertices (corner with group of three points to make a triangle and
points) are given sequence of points does not matter, hence will use
combination. Example: Using eight points how
many triangle can be formed - 𝐶 = 56
Question Patterns No. of ways of Here also sequence does not matter, hence will use
with remarks invitation combination
Selection of color balls Here combination is used assuming that balls are
from box of identical color
No. of ways of forming Refer Example 6 – Page 5.25 Study Mat
words from n letter
taking few letters and
the letter are not
unique
Number of diagonals of 𝐶 − 𝑛, here n means no. of side of polygon
a polygon (refer Q.10 Exercise 5C)

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Probability

→ First use of Probability was made 300 years back in Europe by a group of
Know about mathematicians to enhance their chances of winning in gambling
Probability → It is a full-fledged subject and become an integral part of statistics
→ Theories of Testing Hypothesis and Estimation are based on probability
Subjective Dependent on personal judgment, useful in decision making.
Probability It is out scope of our syllabus
Types
Objective This is based on Mathematical Rules and not judgment
Probability based. We will study this section in our chapter.
Experiment A performance that produces certain results
Random Random An experiment is defined to be random if the results of the
Experiment Experiment experiment depend on chance only.
Examples Tossing a coin, throwing a dice, drawing cards from a pack
Events The results or outcomes of a random experiment are known as events
Based on Combination of Events
Simple or Elementary If the event cannot be decomposed into
further events
Composite or Compound An event that can be decomposed into two or
more simple events

Based on nature of occurrence (applicable for set of events)

Mutually Exclusive or A set of events A1, A2 … is said to be mutually
Types of Events Incompatible Events exclusive if they cannot occur simultaneously.
Occurrence of one implies non occurrence of
other.
Exhaustive Events A set of events A1, A2 … is said to be
exhaustive if one of these must necessarily
occur on a random experiment
Equally Likely or Equi- If it is evident that from the set of events,
Probable Events or none of the events is expected to occur more
Mutually Symmetric frequently than others.
Also called Prior Definition of Probability, this formula is Event (Result) Based.
Classical
It is given by Bernoulli and Laplace.
Definition of no. of events favorable to A
Probability 𝑃(𝐴) =
total number of events
Demerits or → Applicable only when events are finite and are equally
Limitations likely
→ Limited application of this definition like in tossing coin,
throwing dice, cards etc.
Other Notes → 0 ≤ 𝑃(𝐴) ≤ 1, P(A) = 1 means Sure Event, P(A) = 0
More about means impossible event
Classical → Probability of non-occurrence of an event A is denoted
Probability by P(A’) or P(A) is called as complimentary event of A.
P(A’) = 1−P(A)
Odds in Favor no. of favorable events
of an Event no. of unfavorable events
Odds Against no. of unfavorable events
an Event no. of favorable events

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If an experiment results in p outcomes and if it is repeated q times then
Special Formula
Total no. of outcomes = 𝑝
Suits
Terms used in 52
Cards Deck
(four) Spades - ♠ Hearts - Diamond - Clubs - ♣
Ranks
A (Ace), K (King), Q (Queen), J (Jack), 10, 9, 8, 7, 6, 5, 4, 3, 2
(13)
no.of times the event occured during experimental trials 𝑓𝐴
Relative Frequency Relative Frequency = total no.of trials
= n
Definition of 𝑓
Probability by this method is defined as 𝑃(𝐴) = lim → n𝐴
Probability
(Relative Frequency on infinite no. of trials is equal to probability)
Sample Space (denoted a non-empty set containing all the elementary
by S or Ω-omega) events of a random experiment as sample points
Event A Event which is under consideration for probability
Set Based calculations is defined as a non empty subset of Set
Probability S (Sample Space)
Probability Formula no. of sample points in A 𝑛(𝐴)
𝑃(𝐴) = =
no. of sample points in S 𝑛(𝑆)

This definition is also based on Sets Concepts. Here Probability is not a simple
ratio like above, but can be said as function P defined on S known as
Probability Measure.
Axiomatic Or P(A) is defined as the probability of A as per this function only if below
Modern conditions are satisfied:
Definition of Condition 1 𝑃(𝐴) ≥ 0, for every 𝐴 ⊆ 𝑆
Probability Condition 2 𝑃(𝑆) = 1
Condition 3 For any sequence of mutually exclusive events A1, A2, A3...
𝑃(𝐴 ∪ 𝐴 ∪ 𝐴 ∪ … ) = 𝑃(𝐴 ) + 𝑃(𝐴 ) + 𝑃(𝐴 ) + …

Theorem 1 𝑃(𝐴 ∪ 𝐵) = 𝑃(𝐴 + 𝐵) = 𝑃(𝐴 𝑜𝑟 𝐵) = 𝑃(𝐴) + 𝑃(𝐵)

If A and B are mutually exclusive events
Theorem 2 For set of mutually exclusive events 𝐴 , 𝐴 , 𝐴 , …
Addition 𝑃(𝐴 ∪ 𝐴 ∪ 𝐴 ∪ … ) = 𝑃(𝐴 ) + 𝑃(𝐴 ) + 𝑃(𝐴 ) + …
Theorems Theorem 3 𝑃(𝐴 ∪ 𝐵) = 𝑃(𝐴) + 𝑃(𝐵) − 𝑃(𝐴 ∩ 𝐵)
For any two events A and B
Theorem 4 𝑃(𝐴 ∪ 𝐵 ∪ 𝐶) = 𝑃(𝐴) + 𝑃(𝐵) + 𝑃(𝐶) − 𝑃(𝐴 ∩ 𝐵)
− 𝑃(𝐵 ∩ 𝐶) − 𝑃(𝐴 ∩ 𝐶) + 𝑃(𝐴 ∩ 𝐵 ∩ 𝐶)
Expected
No. of sample points n(S) × P(A)
Frequency
Dependent If occurrence of one event is influenced by occurrence of
Events another event, then two events are dependent.
Independent Two events are said to be independent if occurrence of
Events one event do not influence the occurrence of other.
Conditional Probability in case Conditional Probability of B/A: means probability of event B
Probability or of Dependent given that event A has already been occurred
Events A and B 𝐵 𝑃(𝐵 ∩ 𝐴)
Compound 𝑃 = , provided 𝑃(𝐴) > 0
Theorem 𝐴 𝑃(𝐴)
Similarly, Conditional Probability of A/B:
𝐴 𝑃(𝐵 ∩ 𝐴)
𝑃 = , provided 𝑃(𝐵) > 0
𝐵 𝑃(𝐵)
Compound Theorem: P(A∩B) = P(B) × P(A/B) or
P(A∩B) = P(A) × P(B/A)

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Probability in Since there is no dependency,
case of Conditional Probability = Normal Probability
Independent
Events i.e. P(B/A) = P(B) and P(A/B) = P(A)
Here, P(A∩B)= P(A) × P(B)

And for three events, A, B, C

P(A∩B∩C) = P(A) × P(B) × P(C)

Also, if A and B are independent, then below are also

independent :
A and B’, A’ and B, A’ and B’

Random Variable It is a function defined on Sample Space of a random

experiment that can take any value (Real Number)
Discrete Random RV that can take only discrete values. RV on a discrete
Variable sample space
Continuous RV that can take any values within an interval. [infinite
Random Variable:
Random Variable no. of sample points in a sample space]
Probability
Probability If is defined as the statement/ table that shows no. of
Distribution
Distribution different value taken by Random Variable and their
corresponding probabilities
Conditions of If X (a random variable) takes n finite values like
Probability Dist. 𝑋 , 𝑋 , 𝑋 , … , 𝑋 and probabilities are
𝑃 , 𝑃 , 𝑃 , … , 𝑃 then, 𝑃 ≥ 0 for every 𝑖 𝑎𝑛𝑑 ∑ 𝑃 = 1

Expected It is defined as the sum of products of different values taken

Value by Random Variable and corresponding probabilities.
𝐸(𝑥) = ∑ 𝑝 𝑥 (this formula is similar to AM of frequency distribution)
Mean of Since this is mean, we can say that Expected value is equal to
Probability arithmetic mean of probability distribution. Here mean is
Distribution denoted by μ, hence 𝜇 = 𝐸 (𝑥 ) = ∑ 𝑝 𝑥
Expected Value Variance of
Probability 𝑉(𝑥) = 𝜎 = 𝐸(𝑥 − 𝜇) = 𝐸(𝑥) − 𝜇
Distribution
Properties → E.V. of a constant is constant
of E.V. → 𝐸(𝑥 + 𝑦) = 𝐸(𝑥) + 𝐸(𝑦)
→ 𝐸(𝑘. 𝑥) = 𝐸(𝑥). 𝑘
→ 𝐸(𝑥. 𝑦) = 𝐸(𝑥). 𝐸(𝑦)

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Theoretical Distribution

Bernoulli’s → Each trial is associated with two mutually exclusive

Trial and exhaustive outcomes [one is success and other one
is failure]
→ Trials are independent
→ Probability of success (p) and failure (q=1-p) will
remain unchanged throughout the process
→ No. of trials is a positive integer
Binomial It is a discrete random variable X that follows binomial
Variable distribution and is denoted by 𝑿~𝑩(𝒏, 𝒑)
Binomial Probability 𝒇(𝒙) = 𝑷(𝑿 = 𝒙) = 𝒏𝑪𝒙 𝒑𝒙 𝒒𝒏 𝒙
Distribution Mass Function for 𝑥 = 0,1,2,3, … , 𝑛 and 𝑓(𝑥) = 0 if 𝑥 is otherwise
(bi-parametric discrete
probability
Mean 𝝁 = 𝒏𝒑
distribution) Variance 𝟐
𝝈 = 𝒏𝒑𝒒, also Variance is always less than mean,
maximum value of variance is 𝑛 4
Mode Calculate (𝑛 + 1)𝑝,
if the resulting value is 𝝁𝟎 = (𝑛 + 1)𝑝 𝑎𝑛𝑑
integer then Bi-modal [(𝑛 + 1)𝑝 − 1]
If the resulting value is non- 𝝁𝟎 = largest integer
integer then Uni-modal contained in (𝑛 + 1)𝑝
Additive If X and Y are two independent variables such that
Property 𝑿~𝑩(𝒏𝟏 , 𝒑) and 𝒀~𝑩(𝒏𝟐 , 𝒑), then (𝑿 + 𝒀)~𝑩(𝒏𝟏 + 𝒏𝟐 , 𝒑)

Simon Denis Poisson of France introduced this

History
distribution way back in the year 1837
It is a limiting form of Binomial Distribution, where n→∞,
Conditions
p→0. It is also a discrete distribution
Poisson It is a discrete random variable that follows Poisson
Variable Distribution denoted as 𝑿~𝑷(𝒎)
𝒎
(𝒆 . 𝒎𝒙 )
Probability 𝒇(𝒙) = 𝑷(𝑿 = 𝒙) =
Poisson Mass Function 𝒙!
Distribution for 𝑥 = 0, 1, 2, … ∞
(uni-parametric Mean
discrete probability
𝝁=𝒎
distribution) Variance 𝝈𝟐 = 𝒎
Mode Calculate 𝑚,
if the resulting value is 𝝁𝟎 = 𝒎 𝑎𝑛𝑑
integer then Bi-modal [𝒎 − 𝟏]
If the resulting value is non- 𝝁𝟎 = largest integer
integer then Uni-modal contained in 𝒎
Additive If X and Y are two independent variables such that
Property 𝑿~𝑷(𝒎𝟏 ) and 𝒀~𝑷(𝒎𝟐 ), then (𝑿 + 𝒀)~𝑷(𝒎𝟏 + 𝒎𝟐 )

Basics Various Mathematical experiments have proved that most

Normal of the continuous random variables will follow normal
Distribution distribution. It is universally accepted distribution.
(bi-parametric Probability 1 ( ) ×
continuous probability Density 𝑓(𝑥) = ×𝑒
distribution) 𝜎√2𝜋
Function
It is defined for -∞ < 𝑥 < ∞

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Mean = Median = Mode μ
Standard Deviation σ
Mean Deviation 𝜎 × 2/𝜋 = 0.8 𝜎
Quartile Deviation Q1= 𝜇 − 0.675𝜎 and Q3 = 𝜇 + 0.675𝜎
Shape of Normal Curve Bell Shaped
Normal Normal Variable 𝑋~𝑁(𝜇, 𝜎 )
Distribution Only applicable when two different random
Properties variables are independent. Assume we have two
Additive Property variables X and Y such that 𝑿~𝑵(𝝁𝟏 , 𝝈𝟏 𝟐 ),
𝒀~𝑵(𝝁𝟐 , 𝝈𝟐 𝟐 ) then X+𝒀~𝑵(𝝁𝟏 + 𝝁𝟐, 𝝈𝟏 𝟐 + 𝝈𝟐 𝟐)
Normal Curve is 𝑥=𝜇
symmetrical at
Points of Inflexion 𝜇−𝜎&𝜇+ 𝜎
Ratio between QD:MD:SD 10:12:15
Conditions Parameter Value
Mean μ 0
Standard Deviation σ 1
Standard Normal Variate The variable used in this distribution is called
as Standard Normal Variate and is denoted by
𝑍 [Striked Z]
Area from X=
X=-3σ to X=3σ 99.73%
Z Table This table gives
es us the probability of values
from X=μ=0 to X=any value up to 3
Z Score 𝑥−𝜇
Standard Normal 𝑍=
𝜎
Distribution Cumulative Distribution
𝜙(𝑥) = 𝑃(𝑋 ≤ 𝑥
Function
Probability Function 𝑓(𝑧) = 𝑒 ( ) ×
for -∞<z< ∞
√
Mean, Median, Mode μ=0
SD, Variance σ=1, σ2=1
Points of Inflexion -1, 1
Mean Deviation 0.8
Quartile Deviation 0.675
Probability Function 𝑓(𝑧) = 𝑒 ( ) ×
for -∞<z< ∞
√
Area under
Normal Curve
From To Area/Probability
μ +σ 34.135%
+σ +2σ 13.59%
+2σ +3σ 2.14%
3σ ∞ 0.135%

From To Area/Probability
-σ +σ 68.3%
-2σ +2σ 95.5%
-3σ +3σ 99.7%

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SEQUENCE AND SERIES

An ordered collection of numbers arranged as per some definite rule or

Sequence pattern. 𝑎 , 𝑎 , 𝑎 , … , 𝑎 is a sequence if you are able to identify pattern and
there by the value of 𝑎 (nth term)
Collection Ordered Rule/ Pattern Conclusion
1, 4, 9, 17, 18, …… Yes No Not a sequence
Examples of
20, 17, 4, 3, 1, …… Yes No Not a sequence
Sequence
1, 4, 7, 10, 13, …… Yes Yes +3 on each term Yes Sequence
20, 10, 5, 5/2, …… Yes Yes ÷2 on each term Yes Sequence
𝑎 , 𝑎 , 𝑎 , … , 𝑎 are called as 1st Term, 2nd Term, 3rd Term…nth term
Terms
respectively
General Term 𝑎 is called as the nth term of the sequence or General Term
Finite Sequence – sequence having finite elements {𝑎 }
Types of sequence
Infinite Sequence – sequence having infinite elements {𝑎 }∞
Sum of the elements of the sequence is called as Series. 𝑆 = ∑ 𝑎
Series 𝑆 = 𝑎 + 𝑎 + 𝑎 + ⋯+ 𝑎
𝑆 = 𝑎 , 𝑆 = 𝑎 + 𝑎 , 𝑆 =𝑎 + 𝑎 +𝑎
AP is a sequence in which each next term is obtained by adding a constant ‘d’ to
Arithmetic the preceding term. This constant ‘d’ is called as common difference.
Progression (A.P.) Let say a = first term and d = common difference, then AP can be written as –
a, a+d, a+2d, a+3d …. a+(n-1)d
Common
d = any term − preceding term or {𝒕𝒏 − 𝒕𝒏−𝟏 }
Difference ‘d’
nth term of an AP 𝒕𝒏 = 𝒂 + (𝒏 − 𝟏)𝒅
If there is a problem to find out AMs between two number, consider it as an AP
Insert AMs with first number as first term of AP and other number as last term of AP.
between two Number of AMs required = no. of terms between first term and last term
numbers Example: If 3 AMs between a and b is asked, form an AP as below:
a, ___ , ___ , ___ , b

Sum of first n 𝒏(𝒂 𝒕𝒏 ) 𝒏

terms of an AP 𝑺𝒏 = or 𝑺𝒏 = {𝟐𝒂 + (𝒏 − 𝟏)𝒅}
𝟐 𝟐

Sum of first n natural numbers 𝑛(𝑛 + 1)

2
Sum of first n odd numbers 𝑛
Other Useful Sum of squares of first n 𝑛(𝑛 + 1)(2𝑛 + 1)
Formulas natural numbers 6
Sum of cubes of first n natural 𝑛(𝑛 + 1)
numbers 2

Geometric GP is a sequence of terms where each term is a constant multiple of preceding

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Progression (G.P.) term. This constant multiplier is called as common ratio.
Let say a = first term and r = common ratio then GP can be written as
a, ar, ar2, ar3, … , arn-1
nth term of a GP 𝒕𝒏 = 𝒂𝒓(𝒏 𝟏)
𝒕
Common Ratio ‘r’ r= = 𝒏
𝒕𝒏−𝟏
If there is a problem to find out GMs between two number, consider it as a GP
Insert GMs with first number as first term of GP and other number as last term of GP.
between two Number of GMs required = no. of terms between first term and last term
numbers Example: If 3 GMs between a and b is asked, form an GP as below:
a, ___ , ___ , ___ , b
Sum of first n 𝒂(𝟏 𝒓𝒏 ) 𝒂(𝒓𝒏 𝟏)
terms of a GP
𝑺𝒏 = when r<1, when r>1
(𝟏 𝒓) (𝒓 𝟏)
𝒂
Sum of infinite GP 𝑺 = [only possible when r<1]
(𝟏 𝒓)

A. INTRODUCTION TO STATS

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Definition
Singular Sense:
 Scientific method that is used for collecting, analyzing and presenting data
 Used to draw statistical inferences
 Inferences means conclusion reached on the basis of evidence and reasoning
Example:
After applying statistical methods we have arrived at a conclusion that in last 5 years crime rate is
reduced.
Plural Sense:
 Data qualitative or quantitative collected to do statistical analysis
Example: Based on Cricket Match statistic of this stadium, chasing team wins mostly
History of Stats
 Word Origin
 Latin word – Status
 Italian word – Statista
 German word – statistic
 French word – statistique
 Publication:
 Koutilya’s book Arthashastra
 Stat records on Agriculture found in Ain-i-Akbari (author Abu Fezal)
 Census: First ever census done in Egypt (300 years BC to 2000 BC)
Application of Stats
There are various but we will confine to below:
1. Economics: Time Series analysis, index, demand analysis, econometrics, regression analysis
2. Business Management: business decisions rely upon QT
3. Commerce/ Industry: Sales, Purchase, RM, Salary Wages etc. data are analyze for business
decisions and policy making
Limitation of Stats:
1. Relevant for aggregate data and not individual data
2. Quantitative data can only be used, however for qualitative – it needs to be converted into
quantitative
3. Projections are based on conditions/ assumptions and any change in that will change the
projection
4. Sampling based conclusions are used, improper sampling leads to improper results

B. COLLECTION OF DATA

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Data and Variable
 Variable = measurable quantity
 Discrete variable: when a variable assumes a finite or count ably infinite isolated values.
Example: no. of petals in a flower, no. of road accident in locality
 Continuous variable: when a variable assumes any value from the given interval (can
also be in decimals, fractions). Example: height, weight, sale, profit
 Attribute: qualitative characteristics. Example: Gender of a baby, nationality of a person
 Data = quantitative information shown as number. These are of two types:
 Primary : first time collected by agency/ investigator
 Secondary: collected data used by different person/ agency

How to collect Primary Data?

1. Interview Method:
a. Personal Interview: directly from respondents. Example: Natural Calamity, Door to
Door Survey
b. Indirect Interview: when reaching to person difficult, contact associated persons.
Example: Rail accident
c. Telephone Interview: over phone, quick and non-responsive

Type of Interview/
Personal Indirect Telephone
Parameters
Accuracy High Low Low
Coverage Low Low High
Non Response Low Low High

2. Mailed Questionnaire Method:

a. Mailed means by Post or Email
b. Well drafted + properly sequenced + with guidelines
c. Non Response is Maximum

3. Observation Method:
a. Data collected by direct observation or using instrument
b. Example: Height check, Weight check,
c. Although more accurate but it is time consuming, low coverage and laborious

4. Questionnaire filled and sent by Enumerators

a. Enumerator: Person who directly interact with respondent and fill the questionnaire
b. Generally used in Surveys
Sources of Secondary Data
1. International sources like World Health Organization (WHO), International Monetary Fund
(IMF), International Labor Organization (ILO), World Bank
2. Government Sources – In India – Central Statistics Office (CSO), National Sample Survey
Office- NSSO, Regulators – RBI, SEBI, RERA, IRDA
3. Private or Quasi-government sources like Indian Statistical Institute (ISI), Indian Council of
Agriculture, NCERT
4. Research Papers and other unpublished sources

Scrutiny of Data

1. Scrutiny – checking accuracy and consistency of data

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2. Finding of errors by enumerators while filling or receiving questionnaire
3. Internal consistency check:
eck: when two or more series of related data are given check each
other
4. Consider enumerators’ bias while using data

C. PRESENTATION OF DATA

Classification and organization of Data

Data:
 means process of arranging data based on some logic
 there are four types off classification of data
a. Chronological/ Temporal/ Time Series Data (ex. Profit YoYi.e year on year)
b. Geographical or Spatial Series Data (ex. Weather in North India and South India)
c. Qualitative or Ordinal Data (ex. Rating Top 20 songs by Radio Mirchi)
d. Quantitative
itative or Cardinal Data (no. of left handed batsmen in cricket teams playing
CWC19)
Mode of Presentation
1. Textual: where text is used in the form of para or sentence. Example: Height of A,B and C is
160cm, 165cm, 175cm respectively
2. Tabular/ Tabulation:
 Data ta shown in the form of table
 Some important terms about Table (we will understand by example - next page figure)
 It is preferred over textual form because
 Useful in easy comparison
 Complicated data can be presented
 Table is must to create a diagram
 No analysis
alysis possible without diagram

3. Diagrammatic representation of data

 Can be helpful for layman (without having much knowledge of numbers)
 Hidden trend can be traced

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 Table is more accurate than diagrams
 Types of Diagram below:

Line Diagram/ Histogram:

 plotting points in graph and join them to make a line
 used generally for time series (variable y is plotted against time t)
 for wide fluctuation, log chart or ratio chart is used (log y is plotted against t)
 for two or more series of same unit – multiple line chart is used
 for two or more series of distinct unit – multiple axes chart is used
 Refer Material for Diagram
Bar Diagram
 Bar means rectangle of same width and of varying length drawn horizontally or
vertically
 For comparable series – multiple or grouped bar diagrams can be used
 For data divided into multiple components – subdivided or component bar diagrams
 For relative comparison to whole, percentage bar diagrams or divided bar diagrams
Pie Chart
 Used for circular presentation of relative data (% of whole)
 Summation of values of all components/segments are equated to 360 Degree (total
angle of circle)
°
 Segment angle =
D. FREQUENCY DISTRIBUTION

What is Frequency Distribution?

Frequency means number of times a particular observation is repeated. This applies to both variable
and attribute. It is shown in tabular form with class interval or the observation in one column and its
frequency in the other.
These are of two types
 Ungrouped/ Simple Frequency Distribution
 Grouped Frequency Distribution

Important Terms

1. Mutually exclusive classification or Overlapping Classification: This is usually applicable for

continuous variable. An observation as UCL is excluded from the class interval and taken in the
class where it is LCL.
Example: in the below class interval where will the observation 20 fall?
Class Class where
20 will fall
10-20 No – excluded
20-30 Yes
30-40 No

2. Mutually inclusive classification or Non Overlapping Classification: This is usually

applicable to discrete variable. All observation including UCL and LCL will be taken in the same
class interval as there is no confusion.
Example:

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Class Class where
20 will fall
10-19 No
20-29 Yes
30-39 No

3. Class Limit: for a class interval CL is the minimum and maximum value the class interval may
contain. Minimum = Lower Class Interval (LCL) and Maximum = Upper Class Interval (UCL)
Example:

Class Type LCL UCL Class Type LCL UCL

10-19 Mutually Inclusive 10 19 10-20 Mutually Exclusive 10 20
20-29 Mutually Inclusive 20 29 20-30 Mutually Exclusive 20 30
30-39 Mutually Inclusive 30 39 30-40 Mutually Exclusive 30 40

4. Class Boundary: These are actual class limits of a class interval

a. For Mutually Exclusive / Overlapping : Class Boundary = Class Limit
LCL = LCB, UCL = UCB
b. For Mutually Inclusive / Non Overlapping: Mid of the two class limits
LCB = LCL – D/2, UCB = UCL + D/2
Example:

Class Type LCL UCL LCB UCB Class Type LCL UCL LCB UCB
Mutually Mutually
10-19 10 19 9.5 19.5 10-20 10 20 10 20
Inclusive Exclusive
Mutually Mutually
20-29 20 29 19.5 29.5 20-30 20 30 20 30
Inclusive Exclusive
Mutually Mutually
30-39 30 39 29.5 39.5 30-40 30 40 30 40
Inclusive Exclusive

5. Mid Point/ Mid Value of Class / Class Mark

𝐋𝐂𝐋 𝐔𝐂𝐋 𝐋𝐂𝐁 𝐔𝐂𝐁
or
𝟐 𝟐
6. Width / Size of Class Interval
UCB – LCB

7. Cumulative Frequency

Class Frequency Less than type CF More than type CF

10-20 5 5 18
20-30 2 7 13
30-40 8 15 11
40-50 3 18 3
Total 18

8. Frequency Density
𝐅𝐫𝐞𝐪𝐮𝐞𝐧𝐜𝐲 𝐨𝐟 𝐜𝐥𝐚𝐬𝐬
𝐂𝐥𝐚𝐬𝐬 𝐥𝐞𝐧𝐠𝐭𝐡 𝐨𝐟 𝐭𝐡𝐚𝐭 𝐜𝐥𝐚𝐬𝐬
9. Relative Frequency or % Frequency

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𝐅𝐫𝐞𝐪𝐮𝐞𝐧𝐜𝐲 𝐨𝐟 𝐜𝐥𝐚𝐬𝐬
𝐓𝐨𝐭𝐚𝐥 𝐅𝐫𝐞𝐪𝐮𝐞𝐧𝐜𝐲 𝐨𝐟 𝐭𝐚𝐛𝐥𝐞
Class Frequency Relative Percent
Class Frequency
Length Density Frequency Frequency
10-20 5 10 0.5 5/18 27.7%
20-30 2 10 0.2 2/18 11.11%
30-40 8 10 0.8 8/18 44.44%
40-50 3 10 0.3 3/18 16.67%
Total 18

Graphical Presentation of Frequency Distribution

1. Histogram/ Area Diagram [refer study material page 14.20 for diagram]
a. It is a convenient way to represent FD
b. Comparison between frequency of two different classes possible
c. It is useful to calculate mode also
d. Steps to create
 Covert CL into CB and plot in x axis
 Form rectangles taking class interval as base (x axis)
 And frequency as length (y axis) | Use frequency density in case of uneven length

2. Frequency Polygon
a. Usually preferable for ungrouped frequency distribution
b. Can be used for grouped also but only if class lengths are even
c. Steps to create
 Plot (xi, fi) where xi = class value (in case of ungrouped), mid value (in case of
grouped) and fi = frequency
 Join all plotted points to make line segments which eventually will become a polygon
(a shape with multiple number of line segments)

3. Ogives/ Cumulative Frequency Graph

a. Create a table where cumulative frequency is mapped against each CB (Class Boundary) and
make a curve by plotting and joining points by line segments. (curve is called Ogive)
b. This graph can be made by both type of Cumulative Frequency and called as Less than Ogive
or More than Ogive
c. It can be used for calculating quartiles also
d. If we plot both ogives in same graph, perpendicular line drawn from their intersection
towards x axis is cutting axis at Median

4. Frequency Curve
a. It is a limiting form of Area Diagram (Histogram) or frequency polygon
b. It is obtained by drawing smooth and free hand curve though the mid points
c. These are of below four types:
 Bell Shaped
 U-Shaped
 J-Shaped
 Combination of Curves as Mixed Curve

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