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 the relative dispersion of a data set, calculated by dividing the standard deviation by the mean. A smaller CV indicates that the data points are more tightly clustered around the mean, and therefore have a smaller relative dispersion. Therefore, Industry A has a smaller relative dispersion of net profit margins compared to Industry B because it has a smaller coefficient of variation.

An Analyst Gathered the Following Information About the Net Profit