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IAI Actuarial Core Principles · Actuarial Statistics · Purpose and function of data analysis

Which of the following best describes the key distinction between inferential and descriptive analysis?

Inferential analysis draws conclusions about a wider population from a sample and accounts for sampling uncertainty, for example through confidence intervals and hypothesis tests. Descriptive analysis only summarises the data actually held, without generalising beyond it.

  1. AInferential analysis draws conclusions about a population from a sample, allowing for sampling uncertaintyCorrect
  2. BInferential analysis only uses graphs while descriptive analysis uses formulas
  3. CInferential analysis summarises the full data set without any sampling
  4. DInferential analysis always produces a forecast of future values
  5. Inferential analysis requires no assumptions about the data

Explanation

Inferential analysis uses sample data to make statements about a wider population, quantifying uncertainty through estimates, intervals and tests. Descriptive analysis only summarises the data held. Forecasting is predictive, and inference does rely on assumptions.

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