For each of the following situations, say whether parametric or nonparametric methods would be preferred. Give a reason for your choice and indicate how serious a problem it would be to use the other method.
a. Your data set consists of bond ratings, of which AAA is a higher grade than AA, which is higher than A, and so on.
b. Your data set consists of profits as a percentage of sales, and there is an outlier due to one firm that is involved in a serious lawsuit. You feel that the outlier must be left in because this lawsuit represents one of the risks of this industry group.
c. Your data set consists of the weights of faucet washers being produced by a manufacturing system that is currently under control. The histogram looks very much like a normal distribution.

  • CreatedNovember 11, 2015
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