- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 7. Chebyshev's Inequality
CFA Practice Question
What is the difference between Chebyshev's Inequality and the Empirical Rule?
B. Chebyshev's Inequality applies to any probability distribution; the Empirical Rule applies only to distributions in which 68%/95%/99% of the data points fall within one/two/three standard deviations of the mean.
C. Chebyshev's Inequality applies to any mound-shaped probability distribution; the Empirical Rule applies only to distributions in which 95% of the data points fall within two standard deviation of the mean.
A. Chebyshev's Inequality applies only to distributions in which 68% of the data points fall within one standard deviation of the mean; the Empirical Rule applies only to mound or symmetrical distributions.
B. Chebyshev's Inequality applies to any probability distribution; the Empirical Rule applies only to distributions in which 68%/95%/99% of the data points fall within one/two/three standard deviations of the mean.
C. Chebyshev's Inequality applies to any mound-shaped probability distribution; the Empirical Rule applies only to distributions in which 95% of the data points fall within two standard deviation of the mean.
Correct Answer: B
User Contributed Comments 3
| User | Comment |
|---|---|
| olagbami | Empircal rule applies to normal distribution where 68% of data point fall within 1 std dev, 95% of data ponts fall within 2 std dev, and 99% of data points fall within 3 std dev. |
| johntan1979 | Keyword is ANY probability distribution, regardless of the shape. |
| khalifa92 | Chebyshev's inequality holds for samples and populations and for discrete and continuous data regardless of the shape of the distribution. |