Quantitative Research Example
Quantitative Research deals with measurable solutions and numbers, which is done in a systematic way to understand the given phenomena and its relationship between those numbers. Quantitative research is performed to explain the situation or phenomena and thereby provide a prediction or estimation around this and can, therefore, be controlled. In this article, we are provide you with the top 4 examples of quantitative research.
Top 4 Examples of Quantitative Research
Example #1 – Using Mean for Opinion Poll
There is a new marketing campaign for the launch of your product which is a smartphone with some added camera benefits. The audience was to rate the additional features on a scale of 1 to 5 , 5 being the highest.
Below is the result of the poll that was taken for a sample size of 50 people from different areas and age groups:
Since there is a different count of respondents for each of the ratings, hence we need to calculate the result by using the Weighted Average Mean method. Weighted Average Mean can be calculated using the sumproduct() function in excel.
On calculating, we see that the mean is higher than 3, which means that the observation has resulted in a positive response. The additional features in the camera of the smartphone have created a positive impact and this survey on the pilot sample creates a go-ahead situation for the company.
Example #2 – Calculating Portfolio Return
The portfolio a client has invested in has to be managed by an authorized portfolio manager. This portfolio contains 60% common stocks, 30% in bonds, and 10% in cash. The return on common stocks is 14%, return on bonds is 8% and the return on cash is 3.5%.
The portfolio return can be calculated using the concept of the important investment where the overall return is the weighted average of the returns of the individual assets in the portfolio.
Therefore, the weighted average on each asset class can be calculated as,
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=60% * 14%
Similarly, we can calculate the weighted average of other assets class as shown above
As seen below, the return on the overall Portfolio can be easily calculated if we know the returns on each of the asset class. In this scenario, the portfolio is generating a return of 11 % per annum for the investor.
=8.400% + 2.400% + 0.3500%
Return on Overall Portfolio =11%
The step-by-step details of how can we arrive at the portfolio return, when each of the asset classes have a different weightage in the portfolio, can be calculated using the concept of Weighted Average.
Example 3 – Risk Assessment
Risk assessment is a combination of risk analysis and risk evaluation.
Risk analysis is the different methods and ways of identifying and analyzing potential future events impacting current situations, while, risk evaluation is making estimations and judgments based on the risk analysis done. This is one of the most important processes the management needs to do to handle a team and its employees.
- Risk assessment score is the average of the Likelihood, Impact, and Current Values
- The above 3 components are rated on a scale of 1 to 3, 3 being the highest. However, the overall assessment is done a scale of 0 to 5. The scale of 1 to 3 is converted to 0-5 by the risk analytics.
Let us check for the current scenario of a business idea where:
- Likelihood = Medium
- Impact = Medium
- Current Impact = High
In order to calculate the Risk Assessment on a scale of 0 to 5, we can solve the same using the Excel spreadsheet features:
The calculation of risk assessment will be –
=((2+2+3)/3)*2 – 1
Risk Assessment =3.67
By doing an average we are assessing the risk from 1 to 3 and by multiplying it by 2, we are stretching the same over a larger scale, which is 0 to 5 here. Therefore, the above calculation results in a rating of 3.67 for the risk assessment. This implies the business idea in question depicts medium risk involvement, which means a positive status for the business unit.
Example #4 – Calculation of Average Annual Return
The stock price for one stock of Microsoft corporation approximately 10 years back as on 13th February 2009 was $14.898. The current stock price for the same, as on 11th February 2019 is $105.25.
The average annual return for a given stock or fund can be calculated using the concept of Geometric Mean:
The Average Annual Return can be calculated as follows,
Average Annual Return = 21.59%
As seen, the stock has given a more than satisfactory returns as compared to its peers when compared over the same 10 years. This kind of analysis is further used for peer comparison, built estimates as well as create any detailed valuation model or numbers around this.
Quantitative Methodology is used in almost all the fields of humanity today, and the reason being facts and numbers being used. The dependency, variables, and estimation become easier and valid, weighing this research and methodology more than anything else. On the other hand, qualitative research methodologies are used as and when appropriate. Gradually, we are also developing mixed-methods research tools that mix the use of qualitative and quantitative requirements, methods, and paradigms.
This has been a guide to what is Quantitative Research and its definition. Here we provide the top 4 examples of Quantitative Research with detailed explanations and calculations. You can learn more about accounting from the following articles –