Name three methods of calculating dispersion and the advantage, disadvantage of each.
Max min Standard deviation interquartile range are we supposed to know the advantages and disadvantages of each??! what the…
Hahah…let’s hope not, but it’s easy anyways… Max, Min - Easily understood, but has outliers Interquartile Corrects for outliers, not not easily understood Std Deviation - Most widely accepted, not sure if there would be any disadvantages.
itstoohot Wrote: ------------------------------------------------------- > are we supposed to know the advantages and > disadvantages of each??! what the… See Q24 P 318 Vol6 CFAI Mostly: Is it easy to calculate? Is it easy to understand (by non CFA charterholder types)? Is it effected by outliers?
I believe the disadvantage of StDev is that it assumes a normal distribution and therefore can be misleading if portfolios include derivatives. Also skewed by outliers.
The stdev “calculation is somewhat difficult by hand especially for large porfolios”