A set of comparable sales has a mean of $250,000 and a standard deviation of $20,000. What is the coefficient of variation?
Correct Answer
C) 8.0 percent
Why this is correct: The original explanation gives the formula: Coefficient of Variation (CV) = (Standard Deviation / Mean). Here, CV = $20,000 / $250,000 = 0.08 = 8%. The governing concept is that CV standardizes dispersion relative to the mean, allowing comparison between datasets with different average values. Why the other choices are wrong: 12.5 percent would result from incorrectly dividing the mean by the standard deviation ($250k/$20k). 20.0 percent is simply the standard deviation expressed as a percentage of 100,000, not the mean. 2.5 percent might come from dividing $20,000 by $800,000 or another miscalculation. Exam tip: CV = (Standard Deviation / Mean). It's a percentage, so multiply the decimal result by 100.
Why This Is the Correct Answer
Why this is correct: The original explanation gives the formula: Coefficient of Variation (CV) = (Standard Deviation / Mean). Here, CV = $20,000 / $250,000 = 0.08 = 8%. The governing concept is that CV standardizes dispersion relative to the mean, allowing comparison between datasets with different average values. Why the other choices are wrong: 12.5 percent would result from incorrectly dividing the mean by the standard deviation ($250k/$20k). 20.0 percent is simply the standard deviation expressed as a percentage of 100,000, not the mean. 2.5 percent might come from dividing $20,000 by $800,000 or another miscalculation. Exam tip: CV = (Standard Deviation / Mean). It's a percentage, so multiply the decimal result by 100.
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