Measures of Central Tendencies and Dispersion

Formulae
Population Mean

Σx
μ=
N
(x + x + x +....+ x n )
μ= 1 2 3
N
Where
N = the number of terms in the population
x1, x2, x3, x4 ….xn values of all observations in the population
Sample Mean
Σx
x̄=
n
(x1 + x 2 + x3 +....+ x n )
x̄=
n
Where
n = the number of terms in the sample
x1, x2, x3, x4 ….xn values of all observations in the sample
Median
For an array with an odd number of terms, the median is the middle number
For an array with an even number of terms, the median is the average of the two middle
numbers

Mode
The most frequently occurring value in a set of data

Mode = 3 Median – 2 Mean

Weighted Mean
i=n

∑ ( xi X wi )
i=0
x̄ =
Σ wi
where
x = Weighted mean
w = The weight
x = The value of the observation
Geometric Mean
GM = √n x 1 X x 2 X x3 X .... X x n
1
n
GM = (x 1 X x 2 X x 3 X .... X x n )

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 Measures of Central Tendencies and Dispersion

Variance
Short-Cut Formula
2
2 (∑ x )
2
∑ (x−μ ) ∑ x −
σ2 = N
N σ2 =
2 N
2
s =
∑ (x−x̄)
(∑ x )
2
2
(n−1) ∑ x −
2 n
s =
n−1
Where
x= observation
μ = mean
N = number of observations in the population
n = number of observations in the sample
s2 = sample variance
σ2 = population variance
Standard Deviation
Short-Cut Formula
2

σ =

s =
√ σ2

√ s2
=

=
√ Σ(x−μ)
N
Σ( x− x̄)2
√
2

σ = √σ 2
=
√ ∑x 2
−
N
( ∑ x)
N

√
(n−1) 2 ( ∑ x)
∑x − n
s = √ s2 =
n− 1
Where
s2 = sample variance
σ2 = population variance
x = observation
μ = population mean
N = number of observations in the population
n = number of observations in the sample

Coefficient of Variation
CV = Standard Deviation x 100
Mean

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 Measures of Central Tendencies and Dispersion

1. Following are the earnings (in Rs. Lakhs) in 2019 of all the 6 employees of a small
company
8.85 10.84 6.55 5.25 7.98 5.46
Calculate the mean, median, variance, standard deviation and co-efficient of variation
Ans
All figures in Rs. Lakhs
mean = Rs. 7.49 median = Rs. 7.27 variance = 3.89 standard deviation = Rs. 1.97
CV=26.30%

2. The following data gives the number of shoplifters apprehended during each of the past
8 weeks in a large department store
71831541
Calculate the mean, median, mode, variance, standard deviation and co-efficient of
variation
Ans mean = 3.75 median = 3.50 mode = 1 variance = 7.64 standard deviation = 2.76 CV=
73.6%

3. The following data gives the number of junk emails received by 10 families during the
past month
41 33 28 21 29 19 14 31 39 36
Calculate the mean, median, mode, variance, standard deviation and co-efficient of
variation
Ans mean = 29.10 median = 30 mode = 0 variance = 78.10 standard deviation = 8.84
CV= 30.34%

4. Choudhari & Bros own a factory which manufactures two products A and B. The profit
( in ‘000Rs) of the two products from 2012 to 2020 is given below. Find which product
gives more consistent profit to Choudhari & Bros
Year 2012 2013 2014 2015 2016 2017 2018 2019 2020
Profit for A 101 95 110 105 112 99 102 100 112
Profit for B 82 90 109 80 81 72 75 80 115
Ans: Product A : Mean = 104, S.D = 5.77, CV =5.55%
Product B : Mean = 87.33, S.D =14.22, CV = 16.28%
Product ___ gives more consistent profit.

4. X Ltd is actively considering the following two mutually exclusive projects for adoption.
Project X (Rs in lakhs) 10 5 20 40 60
Project Y(Rs in lakhs) 5 25 45 30 30
Which is the most risky project. [ use co-efficient of variation ]
Ans: Project X: Mean = 27, S.D = 20.40, CV = 75.54%
Project Y: Mean = 27, S.D = 12.88, CV = 47.72%
Project is ___ is more risky because the coefficient of variation is higher

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 Measures of Central Tendencies and Dispersion

5. The mean and median for a data set is 27.5 and 26. Find the mode.
Solution:
Mode = 3 Median – 2 Mean

6.

Ans:

7. A student has to study 5 subjects in a semester. For each subject he is awarded a grade
(A, B, C or D) based on his performance. The subjects have varying credit hours
depending on the curriculum. (Credit hours reflect the number of classroom hours of
teaching). At the end of the semester the student’s CGPA is reported in his mark sheet.
The CGPA is a weighted average of his grade points, weighted with the credit hours for the
respective course. Below is the data regarding his performance in all subjects in the
semester. Grade A carries 10 grade points, grade B – 8 grade points, grade C – 6 grade
points and grade D carries 4 grade points. Calculate his CGPA.

Subjects Subject 1 Subject 2 Subject 3 Subject 4 Subject 5

Credit Hours 3 4 3 6 3
Grade A B B B C

8. Consider a stock that grows by 10% in year one, declines by 20% in year two, and then
grows by 30% in year three. Find the growth rate
Ans 4.6%

x1=1+0.1 = 1.1
x2=1-0.2=0.8
x3=1+0.3=1.3

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 Measures of Central Tendencies and Dispersion

n 3
GM = √ x 1 X x 2 X x3 = √ 1.1 X 0.8 X 1.3=1.046
Growthrate=1.046−1=0.046=4.6 %

8. What is the geometric mean of the data set given? 9.000, 15.00, 21.00
Ans: 14.15

9. The annual returns of an investment for the past four years are +12%, -8%, +9% and
+2%. Find the mean rate of growth.
Ans 1.67%

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 Measures of Central Tendencies and Dispersion

10. The performance of sales personnel of a Tea Company in Mumbai and Kolkata
markets during last ten months are recorded below:
Month Jan Feb March April May June July Aug Sep Oct

Mumbai 105 120 115 118 130 127 109 110 104 112

Kolkata 108 117 120 130 100 125 125 120 110 135

Determine the Arithmetic Mean and Standard Deviation. In which region are the
performance of sales personnel consistent?
Ans
Mumbai: Mean = 115 S.D. (Sample) = 8.78 C.V. = 7.63 %
Kolkata: Mean = 119 S.D (Sample) = 10.63 C.V. = 8.93 %

11. The runs of two batsmen A and B in ten innings each during a certain season are
as under.
A 32 28 47 63 71 39 10 60 96 14
B 19 31 48 53 67 90 10 62 40 80
i Find Mean of both the batsmen.
ii Standard deviation for both the batsmen.
iii Find which of the batsmen is more consistent in scoring, using coefficient of
variation.
Ans
A: Mean = 46 S.D. (Sample) = 26.87 C.V. = 58.40 %
B: Mean = 50 S.D. (Sample) = 25.75 C.V. = 51.50 %

12. Suppose you have initially invested $10,000 in the Stivers Mutual Fund and
$ 5000 in Trippi Mutual Fund. The value of each investment at the end of each
subsequent year is provided as below. Which of the two funds performed better
over this time period?
Stivers Trippi
End of Growth End of Growth
Year
Year Value Factor Year Value Factor
2011 $10,000 $5,000
2012 $11,000 1.100 $5,600 1.120
2013 $12,000 1.091 $6,300 1.125
2014 $13,000 1.083 $6,900 1.095
2015 $14,000 1.077 $7,600 1.101
2016 $15,000 1.071 $8,500 1.118
2017 $16,000 1.067 $9,200 1.082
2018 $17,000 1.063 $9,900 1.076
2019 $18,000 1.059 $10,600 1.071

Strivers MF CAGR = 7.6%

Trippi MF CAGR = 9.8%

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 Measures of Central Tendencies and Dispersion

Since the CAGR of Trippi MF is higher, Trippi MF has performed better

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