- Know your variance! Markopolos did:
Madoff Whistleblower Slams SEC:
Took "About Five Minutes" to Suspect Fraud
Markopolos said he started looking into Madoff because he worked for a rival firm and wanted to know if there was any way Madoff's investment claims were accurate. He said he stuck with his investigation for nine years because he believed Madoff was defrauding investors.
Markopolos claimed to have come to the conclusion that Madoff was a fraud in "about five minutes" by looking at his promotional material and seeing that the graphs representing Madoff's investment returns were a straight line going up at a 45-degree angle.
- What is normally distributed data?
- Section 3.2: Describing the Variability of a Distribution of Data
- Replacing a histogram by a smooth curve....
- Replacing a histogram by a smooth curve....
- the Empirical Rule in (Figure 4.4, p. 105)
- Percentages in categories
- Percentages over categories
- Practical Example:
Problems A, B of Chapter 4 Example - What do we do with Problem C?
- Z-statistic
- The definition:
- Standard Normal "Z table"
(p. 111)
- Mean: 0
- Standard Deviation: 1
- Deducing/refining the empirical rule in the case of a normal
distribution
- Using the Z table to do problems:
Problems C, D, E, F of Chapter 4 Example - Percentage/fraction/probability (p. 123)
- All probabilities are between 0 and 1
- A probability of 0 means that an outcome of interest will never occur.
- A probability of 1 means that an outcome of interest is certain to occur.
- #8, p. 126
- Using the Z-table backwards:
- Strategy: see p. 130
- Problem G of Chapter 4 Example
- #5, p. 131
- The definition: