Question

List and explain briefly mean, median, mode, and standard deviation. Give an example of when it each term could be used in a real-life situation.

Answer 1

Let's say we have a class of 7 students who have obtained different marks in Finance. The marks are as follows:

31,40, 50, 50, 50, 60, 69

Mean is defined as the sum of items divided by the number of items. In this case, the average comes out to be:

(31+40+50+50+50+60+69) / 7 ie. 50. It helps to calculate the average of marks of our class.

Median is the value located in the middle of the data. In our example, it is 50.

The mode is the most frequently occurring item in the data. It means many students (3) have 50 marks.

Now, the Standard Deviation is the measure of the spread of data. For example, if the marks of the students were 47,48,49, 50,51,52, 53; we can see the data is clustered around 50 since marks are not very far away from 50. The spread of data is less. But if we stick to the previous example of 31,40, 50, 50, 50, 60, 69 we can see the spread is more as data is far away from 50. The Standard deviation can be calculated as follows: