- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 3. Frequency Distributions

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**CFA Practice Question**

When grouping data with the purpose of constructing a frequency distribution, the suggested number of equal-sized classes for a data set with 210 observations is ______.

A. 6

B. 7

C. 8

**Explanation:**When constructing a frequency distribution, you may approximate the number of classes of the distribution (k) with the smallest integer (k) such that: 2

^{k}>= Number of observations

Therefore, we are looking for the smallest integer k, such that: 2

^{k}>= 210. We obtain k=8.

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**User Contributed Comments**
10

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

sonderfall |
2^k = 210 k x log 2 = log 210 k = log 210 / log 2 k = 7.714 |

Nuta |
I didn't understand: why 2^k? Could somebody explain? thanks! |

kellyyang |
I don't understand this questions either! can someone can explain a easy way to answer this problem. |

shiva5555 |
What is constructing a frequency distribution? |

poomie83 |
frequency distribution tables or histograms are just summaries of the calculated data. It is supposed to be an easier way to interpret the data. 2^k is the formula used to equate the intervals back to the observations. You need to learn it just like the 104 other formulae |

bruffel |
some of these questions definitely will not appear on the actual exam... this is one of those |

e22205 |
was I doing something wrong? I keep getting 2^8 = 256. And then I noticed it's >= 210, so never mind. |

navarro |
Can someone please explain me this? I'm stuck with this one. Thank you in advance. |

Ladygaga |
@Nuta: for example, you have 3 responses about fruits, you can ask 2 question to classify them: Do you like apple and do you like bananas. The answer will definitely fall into either YY, YN, NY, NN. This makes sure that you have a class for each possible response |

yangv |
Why 2?? |