The coefficient of variation for a set of annual incomes is 18%; the coefficient of variation for the length of service with the company is 29%. What does this indicate?
A) More dispersion in the distribution of the incomes compared with the dispersion of their length of service
B) More dispersion in the lengths of service compared with incomes
C) Dispersion in the two distributions (income and service) cannot be compared using percents
D) Dispersions are equal
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The coefficient of variation is a measure of relative variability. A higher coefficient of variation indicates more dispersion relative to the mean. Since 29% (length of service) is greater than 18% (annual incomes), there is more dispersion in the lengths of service compared to incomes.

The Coefficient of Variation for a Set of Annual Incomes