If a Distribution Is Severely Skewed, Then Which Measure of Central

question 6

Multiple Choice

If a distribution is severely skewed, then which measure of central tendency is preferred?

• A)Median
• B)Mode
• C)Mean
• D)None is necessarily preferred, because skewness affects each of them equally.

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Definitions:

Annual Cash Flow

The net amount of cash and cash-equivalents moving into and out of a business in a given fiscal year.

Payback Period

The length of time required to recoup the funds expended in an investment, or the time taken for an investment's returns to cover its cost.

Investment's Cash Flows

The inflows and outflows of cash associated with investments, including initial costs, returns, dividends, and final sale values.

Straight-Line Depreciation

A methodology for sharing out the expense of a tangible asset over its operational period in consistent yearly dividends.