A coefficient of variation is useful because it:
Correct Answer
C) Expresses dispersion relative to the mean, allowing comparison
Why this is correct: The coefficient of variation (CV) is calculated as (Standard Deviation / Mean) * 100%. It expresses the dispersion (standard deviation) as a percentage of the mean, allowing for comparison of variability between data sets with different units or average values. Why the other choices are wrong: Identifies which observation is the median describes the median's function, not the CV. Converts all of the observed prices into a single index number describes an index, not the CV. Measures the correlation between two variables describes correlation coefficients, not the CV. Exam tip: Remember CV = (Std Dev / Mean). It's for comparing 'spread' across different data sets.
Why This Is the Correct Answer
Why this is correct: The coefficient of variation (CV) is calculated as (Standard Deviation / Mean) * 100%. It expresses the dispersion (standard deviation) as a percentage of the mean, allowing for comparison of variability between data sets with different units or average values. Why the other choices are wrong: Identifies which observation is the median describes the median's function, not the CV. Converts all of the observed prices into a single index number describes an index, not the CV. Measures the correlation between two variables describes correlation coefficients, not the CV. Exam tip: Remember CV = (Std Dev / Mean). It's for comparing 'spread' across different data sets.
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