{"id":25131,"date":"2021-08-12T10:06:05","date_gmt":"2021-08-12T10:06:05","guid":{"rendered":"https:\/\/analystprep.com\/cfa-level-1-exam\/?p=25131"},"modified":"2022-11-03T11:31:19","modified_gmt":"2022-11-03T11:31:19","slug":"alternative-mean-definitions-for-different-investment-problems","status":"publish","type":"post","link":"https:\/\/analystprep.com\/cfa-level-1-exam\/uncategorized\/alternative-mean-definitions-for-different-investment-problems\/","title":{"rendered":"Alternative Mean Definitions for Different Investment Problems"},"content":{"rendered":"<p><iframe loading=\"lazy\" src=\"\/\/www.youtube.com\/embed\/M0gKgPztSoM\" width=\"611\" height=\"343\" allowfullscreen=\"allowfullscreen\"><\/iframe><\/p>\n<h2>Suitability of Alternative Mean Definitions for Different Investment Problems<\/h2>\n<p>$$<br \/>\n\\begin{array}{l|l}<br \/>\n\\textbf { Type of Data } &amp; \\textbf { Mean to Use } \\\\<br \/>\n\\hline \\text { Single period data } &amp; \\text { Arithmetic mean } \\\\<br \/>\n\\hline \\text { More than one-period data } &amp; \\text { Geometric mean } \\\\<br \/>\n\\hline \\begin{array}{l}<br \/>\n\\text { Data where each observation has different } \\\\<br \/>\n\\text { weights }<br \/>\n\\end{array} &amp; \\text { Weighted mean } \\\\<br \/>\n\\hline \\text { For ratios and rates } &amp; \\text { Harmonic mean } \\\\<br \/>\n\\hline \\text { For data having extreme outliers } &amp; \\text { Trimmed mean or Winsorized mean } \\\\<br \/>\n\\end{array}<br \/>\n$$<\/p>\n<blockquote>\n<h2><strong>Question\u00a0<\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">Which of the following means is the <\/span><em><span data-preserver-spaces=\"true\">most\u00a0<\/span><\/em><span data-preserver-spaces=\"true\">suitable for data with more than one period?<\/span><\/p>\n<ol style=\"list-style-type: upper-alpha;\">\n<li><span data-preserver-spaces=\"true\">Weighted mean.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Arithmetic mean.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Geometric mean.<\/span><\/li>\n<\/ol>\n<p><strong><span data-preserver-spaces=\"true\">Solution<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">The correct answer is <strong>C<\/strong>.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The geometric mean is mostly used when calculating the mean of data with more than one period.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">A is incorrect<\/span><\/strong>. <span data-preserver-spaces=\"true\">The weighted mean is suitable for data where each observation has different weights.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">B is incorrect<\/span><\/strong>. <span data-preserver-spaces=\"true\">Arithmetic mean<\/span><span data-preserver-spaces=\"true\"> is suitable for single-period data.<\/span><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Suitability of Alternative Mean Definitions for Different Investment Problems $$ \\begin{array}{l|l} \\textbf { Type of Data } &amp; \\textbf { Mean to Use } \\\\ \\hline \\text { Single period data } &amp; \\text { Arithmetic mean } \\\\ \\hline&#8230;<\/p>\n","protected":false},"author":10,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-25131","post","type-post","status-publish","format-standard","hentry","category-uncategorized","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - 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