Question
In: Statistics and Probability
The table below shows the daily mean closing market price in Dec 2013 for three stocks and their standard deviations. Which stock is more variable?
The table below shows the daily mean closing market price in Dec 2013 for three stocks and their standard deviations. Which stock is more variable?
Oct 2013 | Nov 2013 | Dec 2013 | Jan 2014 |
$76,889 | $74,991 | $74,002 | $72,290 |
Mean daily closing values for Dec 2013
Standard deviation
ABC LMN XYZ 134.4 98.6 179.5
2.6 3.7 3.7
(A) ABC
(B) LMN
(C) XYZ
(D) LMN and XYZ are equally variable
(E) Cannot be determined from the information given
Solutions
Expert Solution
Correct answer is B
mean_ABC = 134.4
SD_ABC = 2.6
mean_LMN = 98.6
SD_LMN = 3.7
mean_XYZ = 179.5
SD_XYZ = 3.7
To compare the variability we need to find Coefficient of variation
CV = SD/x_bar * 100
CV_ABC = SD_ABC/mean_ABC *100 = 2.6/134.4 * 100 = 1.9345
CV_LMN = SD_LMN/mean_LMN = 3.7/98.6 * 100 = 3.7525
CV_XYZ = SD_XYZ/mean_XYZ = 3.7/179.5 * 100 = 2.0613
More the CV more the variation
LMN is the most variable stock
orchestra answered 2 years agoRelated Solutions
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