20 Must-Know Statistics Questions for Data Analyst and Business Analyst Roles (With Detailed Answers)
1. What is the difference between descriptive and inferential statistics?
Descriptive statistics summarize and organize data (e.g., mean, median, mode).
Inferential statistics make predictions or inferences about a population based on a sample (e.g., hypothesis testing, confidence intervals).
2. Explain mean, median, and mode and when to use each.
Mean is the average; use when data is symmetrically distributed.
Median is the middle value; best when data has outliers.
Mode is the most frequent value; useful for categorical data.
3. What is standard deviation, and why is it important?
It measures data spread around the mean. A low value = less variability; high value = more spread. Important for understanding consistency and risk.
4. Define correlation vs. causation with examples.
Correlation: Two variables move together but don't cause each other (e.g., ice cream sales and drowning).
Causation: One variable directly affects another (e.g., smoking causes lung cancer).
5. What is a p-value, and how do you interpret it?
P-value measures the probability of observing results given that the null hypothesis is true. A small p-value (typically < 0.05) suggests rejecting the null.
6. Explain the concept of confidence intervals.
A range of values used to estimate a population parameter. A 95% CI means there's a 95% chance the true value falls within the range.
7. What are outliers, and how can you handle them?
Outliers are extreme values differing significantly from others. Handle using:
Removal (if due to error)
Transformation
Capping (e.g., winsorizing)
8. When would you use a t-test vs. a z-test?
T-test: Small samples (n < 30) and unknown population standard deviation.
Z-test: Large samples and known standard deviation.
9. What is the Central Limit Theorem (CLT), and why is it important?
CLT states that the sampling distribution of the sample mean approaches a normal distribution as sample size grows, regardless of population distribution. Essential for inference.
10. Explain the difference between population and sample.
Population: Entire group of interest.
Sample: Subset used for analysis. Inference is made from the sample to the population.
11. What is regression analysis, and what are its key assumptions?
Predicts a dependent variable using one or more independent variables.
Assumptions: Linearity, independence, homoscedasticity, no multicollinearity, normality of residuals.
12. How do you calculate probability, and why does it matter in analytics?
Probability = (Favorable outcomes) / (Total outcomes).
Critical for risk estimation, decision-making, and predictions.
13. Explain the concept of Bayesโ Theorem with a practical example.
Bayesโ updates the probability of an event based on new evidence:
P(A|B) = [P(B|A) * P(A)] / P(B)
Example: Calculating disease probability given a positive test result.
14. What is an ANOVA test, and when should it be used?
ANOVA (Analysis of Variance) compares means across 3+ groups to see if at least one differs.
Use when comparing more than two groups.
15. Define skewness and kurtosis in a dataset.
Skewness: Measure of asymmetry (positive = right-skewed, negative = left).
Kurtosis: Measure of tail thickness (high kurtosis = heavy tails, outliers).
16. What is the difference between parametric and non-parametric tests?
Parametric: Assumes data follows a distribution (e.g., t-test).
Non-parametric: No assumptions; use with skewed or ordinal data (e.g., Mann-Whitney U).
17. What are Type I and Type II errors in hypothesis testing?
Type I error: False positive (rejecting a true null).
Type II error: False negative (failing to reject a false null).
18. How do you handle missing data in a dataset?
Methods:
Deletion (listwise or pairwise)
Imputation (mean, median, mode, regression)
Advanced: KNN, MICE
1. What is the difference between descriptive and inferential statistics?
Descriptive statistics summarize and organize data (e.g., mean, median, mode).
Inferential statistics make predictions or inferences about a population based on a sample (e.g., hypothesis testing, confidence intervals).
2. Explain mean, median, and mode and when to use each.
Mean is the average; use when data is symmetrically distributed.
Median is the middle value; best when data has outliers.
Mode is the most frequent value; useful for categorical data.
3. What is standard deviation, and why is it important?
It measures data spread around the mean. A low value = less variability; high value = more spread. Important for understanding consistency and risk.
4. Define correlation vs. causation with examples.
Correlation: Two variables move together but don't cause each other (e.g., ice cream sales and drowning).
Causation: One variable directly affects another (e.g., smoking causes lung cancer).
5. What is a p-value, and how do you interpret it?
P-value measures the probability of observing results given that the null hypothesis is true. A small p-value (typically < 0.05) suggests rejecting the null.
6. Explain the concept of confidence intervals.
A range of values used to estimate a population parameter. A 95% CI means there's a 95% chance the true value falls within the range.
7. What are outliers, and how can you handle them?
Outliers are extreme values differing significantly from others. Handle using:
Removal (if due to error)
Transformation
Capping (e.g., winsorizing)
8. When would you use a t-test vs. a z-test?
T-test: Small samples (n < 30) and unknown population standard deviation.
Z-test: Large samples and known standard deviation.
9. What is the Central Limit Theorem (CLT), and why is it important?
CLT states that the sampling distribution of the sample mean approaches a normal distribution as sample size grows, regardless of population distribution. Essential for inference.
10. Explain the difference between population and sample.
Population: Entire group of interest.
Sample: Subset used for analysis. Inference is made from the sample to the population.
11. What is regression analysis, and what are its key assumptions?
Predicts a dependent variable using one or more independent variables.
Assumptions: Linearity, independence, homoscedasticity, no multicollinearity, normality of residuals.
12. How do you calculate probability, and why does it matter in analytics?
Probability = (Favorable outcomes) / (Total outcomes).
Critical for risk estimation, decision-making, and predictions.
13. Explain the concept of Bayesโ Theorem with a practical example.
Bayesโ updates the probability of an event based on new evidence:
P(A|B) = [P(B|A) * P(A)] / P(B)
Example: Calculating disease probability given a positive test result.
14. What is an ANOVA test, and when should it be used?
ANOVA (Analysis of Variance) compares means across 3+ groups to see if at least one differs.
Use when comparing more than two groups.
15. Define skewness and kurtosis in a dataset.
Skewness: Measure of asymmetry (positive = right-skewed, negative = left).
Kurtosis: Measure of tail thickness (high kurtosis = heavy tails, outliers).
16. What is the difference between parametric and non-parametric tests?
Parametric: Assumes data follows a distribution (e.g., t-test).
Non-parametric: No assumptions; use with skewed or ordinal data (e.g., Mann-Whitney U).
17. What are Type I and Type II errors in hypothesis testing?
Type I error: False positive (rejecting a true null).
Type II error: False negative (failing to reject a false null).
18. How do you handle missing data in a dataset?
Methods:
Deletion (listwise or pairwise)
Imputation (mean, median, mode, regression)
Advanced: KNN, MICE
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