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Coefficient of Variation - Measures of Dispersion, Business Mathematics & Statistics Video Lecture | SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

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FAQs on Coefficient of Variation - Measures of Dispersion, Business Mathematics & Statistics Video Lecture - SSC CGL Tier 2 - Study Material, Online Tests, Previous Year

1. What is the coefficient of variation and how is it calculated?
Ans. The coefficient of variation is a measure of relative variability or dispersion in a dataset. It is calculated by dividing the standard deviation of the dataset by its mean, and then multiplying the result by 100 to express it as a percentage. The formula for calculating the coefficient of variation is: Coefficient of Variation = (Standard Deviation / Mean) * 100
2. How is the coefficient of variation useful in comparing the variability of different datasets?
Ans. The coefficient of variation is useful in comparing the variability of different datasets because it takes into account the relative variability in relation to the mean. By using the coefficient of variation, we can compare the dispersion of datasets with different units of measurement or scales. It allows us to determine which dataset has a higher or lower relative variability, regardless of their means or standard deviations.
3. What does a high coefficient of variation indicate?
Ans. A high coefficient of variation indicates a high degree of relative variability or dispersion in a dataset. It suggests that the individual values within the dataset are widely spread out from the mean. In practical terms, a high coefficient of variation implies that the dataset has a large amount of variability, making it less consistent or stable compared to datasets with lower coefficients of variation.
4. How can the coefficient of variation be used in risk assessment or investment analysis?
Ans. The coefficient of variation can be used in risk assessment or investment analysis to assess the volatility or risk associated with different investments. A higher coefficient of variation indicates a higher degree of risk or volatility, while a lower coefficient of variation suggests lower risk or volatility. By comparing the coefficient of variation of different investments, investors can make informed decisions based on their risk tolerance and desired level of return.
5. Can the coefficient of variation be negative?
Ans. No, the coefficient of variation cannot be negative. It is always a positive value or zero. A coefficient of variation of zero indicates that there is no variability in the dataset, as the standard deviation is zero. However, it is important to note that the coefficient of variation may not always be a suitable measure of dispersion for datasets with very small means, as it may result in infinite or undefined values.
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