Page 11 - FINAL CFA SLIDES DECEMBER 2018 DAY 3
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Session Unit 2:
8. Statistical Concepts and Market Returns
LOS 8.e: Calculate and interpret measures of central tendency, including the population
mean, sample mean, arithmetic mean, weighted average or mean, geometric mean, harmonic
mean, median, and mode, p.141/142
The mode (or frequency) is the most frequent value. Can be 1 mode –unimodal; 2 modes –bimodal, or 3 - tri-modal
Example: GM: For the last three years, the returns for Acme Corporation common stock have been –9.34%,
23.45%, and 8.92%. Compute the AM & GM (compound annual rate of return) over the 3-year period.
Key:
The GM ≤AM, and the difference increases as the
dispersion of the observations increases.
If no variability, i.e. all observations are equal, AM = GM
