- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Statistical Measures of Asset Returns
- Subject 2. Measures of Dispersion
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.
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 |