Question
How does the geometric mean differ from the arithmetic mean for returns?
Tap to flip
Answer
It captures compound multi-period growth using (1+R) products.
Tap to flip back
Question
Why is the median often preferred to the mean when extreme values are present?
Tap to flip
Answer
It is less affected by outliers.
Tap to flip back
Question
How is the interquartile range computed, and what does it measure?
Tap to flip
Answer
IQR=Q3−Q1; spread of the middle 50%.
Tap to flip back
Question
Why is the coefficient of variation useful when comparing assets with different mean returns?
Tap to flip
Answer
It measures risk per unit of return.
Tap to flip back