The advantage of using mean absolute deviation rather than variance as a measure of dispersion is that mean absolute deviation ________.
A) is less sensitive to extreme deviations
B) requires fewer observations to be a valid measure
C) is a relative measure rather than an absolute measure of risk
D) considers only unfavorable (negative) deviations from the mean

Question

Quizplus · Accepted Answer

Mean Absolute Deviation is less sensitive to extreme deviations because it uses absolute values, whereas variance uses squared deviations from the mean. It considers both positive and negative deviations and is an absolute measure of risk. However, there is no evidence that it requires fewer observations to be a valid measure.

The Advantage of Using Mean Absolute Deviation Rather Than Variance