Measures of Center and Spread

The mean, everyone's first summary

The median, the robust alternative

Variance and standard deviation

Reading the pair together

A fund earns annual returns of 10, 4, 18, minus 6, and 9 percent over five years. What is the arithmetic mean return?

In the same five-year series, what is the median return, and why does it differ from the mean?

A return series shows a mean of 12 percent and a median of 6 percent. What does the gap suggest?

Why does the variance formula square the deviations from the mean rather than averaging them directly?

For the returns 10, 4, 18, minus 6, and 9 percent, with mean 7 percent, what is the sample standard deviation?

Why do the mean and standard deviation together form the standard two-number summary of an investment's return history?

What one-word term names the middle observation of an ordered data set? Answer in lowercase.

What two-word term names the square root of the variance, the spread measure in the data's original units? Answer in lowercase.

In the sample variance formula, the sum of squared deviations is divided by n minus what number? Write the number.

What two-word term does modern finance use as its quantitative definition of risk for a return series? Answer in lowercase.