Use the following table: What is the difference between the variances for large- and small-company stocks?
A) 40.25%
B) 36.75%
C) 27.30%
D) 14.90%

Question

Use the following table:  What is the difference between the variances for large- and small-company stocks?
A) 40.25% 
B) 36.75% 
C) 27.30% 
D) 14.90%

Quizplus · Accepted Answer

To calculate the difference between the variances of large- and small-company stocks, we need to first find the variances for each size category:
- Variance for large-company stocks: 0.0107
- Variance for small-company stocks: 0.0075

The difference between these variances is:
0.0107 - 0.0075 = 0.0032

To express this difference as a percentage of the average of the two variances, we use the formula:

|variance1 - variance2| / [(variance1 + variance2)/2] x 100%

Plugging in the values we get:

|0.0107 - 0.0075| / [(0.0107 + 0.0075)/2] x 100% = 0.0032 / 0.0091 x 100% ≈ 0.3571 x 100% ≈ 36.75%

Therefore, the answer is B, 36.75%.

Use the Following Table: What Is the Difference Between