- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 2. Organizing, Visualizing, and Describing Data
- Subject 8. Measures of Dispersion

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**CFA Practice Question**

An analyst gathered the following annual return information about a portfolio since its inception on January 1, 2009:

2009 | 8.6%

2010 | 11.2%

2011 | 12.9%

2012 | 15.1%

2013 | -9.4%

Year | Portfolio return

2009 | 8.6%

2010 | 11.2%

2011 | 12.9%

2012 | 15.1%

2013 | -9.4%

The portfolio's mean absolute deviation for the five-year period is closest to ______.

A. 4.86%

B. 6.83%

C. 7.68%

**Explanation:**Compute the mean: (8.6 + 11.2 + 12.9 + 15.1 - 9.4) / 5 = 7.68% and compute MAD, (|8.6 - 7.68| + |11.2 - 7.68| + |12.9 - 7.68| + |15.1 - 7.68| + |-9.4 - 7.68|) / 5 = 6.83%.

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**User Contributed Comments**
2

User |
Comment |
---|---|

asalonga7 |
is there a way to do this on the ba2 or is this a manual calculation every time |

aurihughes |
manual calculation. |