Reading 7: Statistical Concepts and Market Returns-LOS a, (P 2010, border, center, origin

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Session 2: Quantitative Methods: Basic Concepts
Reading 7: Statistical Concepts and Market Returns

LOS a, (Part 2): Differentiate among the types of measurement scales.

 

 

 

Which measure of scale has a true zero point as the origin?

A) Ratio scale.

B) Nominal scale.

C) Ordinal scale.

bmaggie

Which measure of scale has a true zero point as the origin?

A) Ratio scale.

B) Nominal scale.

C) Ordinal scale.

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Ratio scales are the strongest level of measurement; they quantify differences in the size of data and have a true zero point as the origin.

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Fifty mutual funds are ranked according to performance. The five best performing funds are assigned the number 1, while the five worst performing funds are assigned the number 10. This is an example of a(n):

A) interval scale.

B) nominal scale.

C) ordinal scale.

bmaggie

Fifty mutual funds are ranked according to performance. The five best performing funds are assigned the number 1, while the five worst performing funds are assigned the number 10. This is an example of a(n):

A) interval scale.

B) nominal scale.

C) ordinal scale.

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The ordinal scale of measurement categorizes and orders data with respect to some characteristic. In this example, the ordinal scale tells us that a fund ranked “1” performed better than a fund ranked “10,” but it does not tell us anything about the difference in performance.

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