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Answer: Less than the sample standard deviation.
The correct answer is **A** because the mean absolute deviation (MAD) of 1.5% is less than the sample standard deviation of 1.83%. The MAD is calculated as the average of the absolute deviations from the mean, which in this case is 0%. The sample standard deviation, on the other hand, accounts for squared deviations, resulting in a higher value. This demonstrates that MAD is a less sensitive measure of dispersion compared to the standard deviation.
Author: LeetQuiz Editorial Team
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An analyst collects the following sample returns for a security: -2%, -1%, 1%, 2%. The mean absolute deviation (MAD) of the sample returns is:
A
Less than the sample standard deviation.
B
Equal to the sample standard deviation.
C
Greater than the sample standard deviation.
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