- 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
A sample of the personnel files of eight male employees revealed that during a six-month period, the following number of days were lost due to illness: 2, 0, 6, 3, 10, 4, 1, and 2. What is the mean absolute deviation (in days)?
A. 3 1/8
B. 1
C. 2 3/8
Explanation: The mean is 3.5. The mean absolute deviation is the absolute value of the deviation from the mean. (1.5 + 3.5 + 2.5 + 0.5 + 6.5 + 0.5 + 2.5 + 1.5)/8 = 19/8 = 2.375
User Contributed Comments 7
| User | Comment |
|---|---|
| coops | MAD is the absolute difference between each entry and the mean (that means regardless of the sign, so you just add the results since you are measuring the distance from the mean, and get the mean of those summed differences) |
| chuong | Mean Absolute deviation = Mean Deviation |
| Goran80 | Mean Absolute Deviation is Sum of Absotute differences between every entry and sample's mean. |
| Daddykay | Chuong, MAD is not thesame as Mean Deviation. If you take out the absolute sign, then the negative figures will affect your result and make it incorrect. |
| jpducros | Chuong is correct..there is no such thing as mean deviation in fact...only MAD exists |
| tomalot | HULK MAD! HULK SMASH! |
| Alexeyzz | gives module?? without negative sign?? |