Page 50 - FINAL CFA SLIDES JUNE 2019 DAY 2
P. 50
LOS 8.e: Calculate and interpret measures of central Session Unit 2:
tendency, including the population mean, sample 8. Statistical Concepts and Market Returns
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
