Page 14 - FINAL CFA SLIDES DECEMBER 2018 DAY 3
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Session Unit 2:
8. Statistical Concepts and Market Returns
LOS 8.g: Calculate and interpret 1) a range and a mean absolute deviation and 2) the
variance and standard deviation of a population and of a sample, p.144
Dispersion is defined as the variability around the central tendency. E.g. The range = maximum value – minimum value
Example: What is the range for the 5-year annualized total returns for five investment managers their
individual returns were 30%, 12%, 25%, 20%, and 23%?
Why |Absolute|? Because sum of actual is 0. Remember?
Example: What is the MAD Meaning?
of the investment returns
for the five managers On average, an individual
above? How is it return will deviate ±4.8% from
interpreted? the mean return of 22%.
