An analyst gathered the following information about the net profit margins of companies in two industries: Compared with the other industry,the relative dispersion of net profit margins is smaller for Industry:
A)B,because it has a smaller mean deviation.
B)B,because it has a smaller range of variation.
C)A,because it has a smaller standard deviation.
D)A,because it has a smaller coefficient of variation.

Question

An analyst gathered the following information about the net profit margins of companies in two industries:  Compared with the other industry,the relative dispersion of net profit margins is smaller for Industry:
A)B,because it has a smaller mean deviation. 
B)B,because it has a smaller range of variation. 
C)A,because it has a smaller standard deviation. 
D)A,because it has a smaller coefficient of variation.

Quizplus · Accepted Answer

The coefficient of variation (CV) is a measure of relative dispersion, calculated by dividing the standard deviation by the mean. A smaller CV indicates a smaller relative dispersion of the data. Therefore, Industry A has a smaller relative dispersion than Industry B because it has a smaller coefficient of variation.

An Analyst Gathered the Following Information About the Net Profit