Gaussian Distribution Basics
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Questions and Answers

What is the Gaussian distribution characterized by?

  • A straight line, asymmetrical around its mean, and characterized by its mean and standard deviation
  • A U-shaped curve, symmetrical around its median, and characterized by its mode and range
  • A bell-shaped curve, symmetrical around its mean, and characterized by its mean and standard deviation (correct)
  • A triangular shape, asymmetrical around its mean, and characterized by its mode and median

    • What does the Central Limit Theorem state?

  • The sum of a small number of dependent and non-identically distributed random variables will tend to be normally distributed
  • The sum of a large number of dependent and non-identically distributed random variables will tend to be normally distributed
  • The sum of a large number of independent and identically distributed random variables will tend to be uniformly distributed
  • The sum of a large number of independent and identically distributed random variables will tend to be normally distributed (correct)

    • Why is the Gaussian distribution important?

  • It is the only distribution applicable to real-world data
  • It only applies to a few specific scenarios
  • It is the simplest form of distribution to understand
  • It describes the distribution of many naturally occurring phenomena (correct)

    • What phenomena can be described by a Gaussian distribution?

    <p>The distribution of heights or IQ scores of people</p> Signup and view all the answers

    What does the graphical depiction of the Central Limit Theorem show?

    <p>How a huge number of data points cluster together</p> Signup and view all the answers

    What is the main implication of an asset deviating from the mean price in a normal distribution?

    <p>It is more likely to be under or overvalued</p> Signup and view all the answers

    Why do most traders limit their transactions to shorter intervals of time when modeling price movements as a normal distribution?

    <p>Shorter intervals offer clearer buying and selling signals</p> Signup and view all the answers

    What is the kurtosis of price distributions with fat tails?

    <p>Bigger than 3</p> Signup and view all the answers

    Why may past performance of an asset not reliably foretell future results, even if it has followed a normal distribution over a lengthy period of time?

    <p>Future price movements are uncertain and influenced by various factors</p> Signup and view all the answers

    What do traders look at to suggest potential trades when modeling price movements as a normal distribution?

    <p>Standard deviations</p> Signup and view all the answers

    What are prediction errors in machine learning usually known as?

    <p>Bias and Variance</p> Signup and view all the answers

    What is the main aim of ML/data science analysts in relation to prediction errors?

    <p>To reduce the errors for more accurate results</p> Signup and view all the answers

    What concept describes the trade-off between bias and variance in machine learning?

    <p>Bias-Variance trade-off</p> Signup and view all the answers

    What is the term for the situation where a machine learning model is not complex enough to capture the underlying patterns in the data?

    <p>Underfitting</p> Signup and view all the answers

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