- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 2. Measurement Scales

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**CFA Practice Question**

Stock performance can be rated as 5 (superior), 4 (above average), 3 (average), 2 (below average) or 1 (poor). This is an example of which type of measurement?

B. ordinal

C. interval

A. nominal

B. ordinal

C. interval

Correct Answer: B

This is an example of an ordinal scale. since this data can be ranked or ordered but the difference between the ranks cannot be determined in a meaningful way.

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**User Contributed Comments**
4

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

rainatt |
why not interval? |

cbb1 |
It is ordinal because the categories are numerical, but not interval since there is no indication that the intervals between the categories are the same. In other words, Superior (5) is better than Above Average (4), but we don't know if the difference between 5 and 4 is the same as the difference between 3 and 2. |

alester83 |
i think of them as catagory, ranks, range, and ratio. it helps keep them straight. |

2014 |
Interval says, difference between two different point is equal: as per 5-4 = 1, 2-1 = 1 difference is same. But in performance u cannot apply this equality |