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Comparing Measures of Central Tendency
Author(s)
David M. Lane
Prerequisites
Percentiles,
Distributions, What
is Central Tendency, Measures of Central
Tendency, Mean and Median
Learning Objectives
- Compute the trimean
- Compute the geometric mean directly
- Compute the geometric mean using logs
- Use the geometric to compute annual portfolio returns
- Compute a trimmed mean
How do the various measures of central tendency
compare with each other? For symmetric
distributions, the mean, median, trimean, and trimmed mean
are equal, as is the mode except in bimodal
distributions. Differences among the measures occur with skewed
distributions.
With a positively skewed distribution, the mean is
typically higher than the median and
the trimean
and trimmed
mean will fall between them. The geometric
mean is usually lower than all measures except the mode.
Please answer the questions:
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