- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 2. Measurement Scales

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**CFA Practice Question**

An analyst gathers the price-earnings ratios (P/E) for the firms in the S&P 500 and then ranks the firms from highest to lowest P/E. She assigns the number 1 to the group with the lowest P/E ratios, the number 2 to the group with the second lowest P/E ratios, and so on. The measurement scale used by the analyst is best described as ______.

A. nominal

B. ordinal

C. interval

**Explanation:**The analyst is using an ordinal scale which involves sorting data into categories based on some characteristic (here, the firms' P/E ratios).

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