- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 6. Measures of Dispersion

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**CFA Practice Question**

Which measure of dispersion does not disregard the algebraic signs (plus and minus) of each difference between X and the mean?

A. Standard deviation

B. Coefficient of variation

C. Mean deviation

**Explanation:**CV = s / X-bar, and x-bar can be negative or positive, or even 0.

The mean deviation is the mean of the absolute values of deviations from the mean.

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**User Contributed Comments**
4

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

rgat |
stdev is numerator of CV equation, thus signs are disregarded indirectly. |

cleopatraliao |
because the mean would change if any observation flips the sign, that's why the cv would change if you move a positive x to negative territory. |

albert9 |
What is the difference between standard deviation and "mean deviation"? |

Krucinski |
Mean deviation is the average difference to the mean |