- 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 of the following is (are) true?

II. The range of a data set can never be negative.

III. The mean deviation is always less than the mean absolute deviation (MAD).

I. The mean deviation can never be negative.

II. The range of a data set can never be negative.

III. The mean deviation is always less than the mean absolute deviation (MAD).

A. I and II

B. II and III

C. I and III

**Explanation:**Range of a dataset = maximum value - minimum value. Therefore, the range can never be negative. Since the mean deviation is the average of the absolute deviations from the mean, it can never be negative, either. Mean deviation and mean absolute deviation are one and the same thing.

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**User Contributed Comments**
6

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

coops |
mean deviation is not a recognized term. This leads us to believe that you are referring to standard deviation which is the square root of the sum of the squared deviations. |

snider |
According to http://www.thefreedictionary.com/mean%20deviation: Mean Deviation: In a statistical distribution, the average of the absolute values of the differences between individual numbers and their mean. |

BADGUY |
if the max no.in a set of numbers is -2 and the min.no.in the set is -16,i guess the range would be -18.isn't that a negative value? |

BADGUY |
am sorry,about that oversight.withdrawn. |

danlan |
Snider, good comment |

showmethemoney |
in general, sigma > MAD |