A Bar Chart and a Pareto Chart Both Use Bars

question 34

Essay

A bar chart and a Pareto chart both use bars to show frequencies of categories of categorical data. What characteristic distinguishes a Pareto chart from a bar chart and how does that
characteristic help us in understanding the data?

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Definitions:

Company-Specific

Company-Specific refers to factors or risks that affect an individual company's performance, distinct from broader market or industry factors.

Unsystematic Risk

The risk associated with a specific company or industry, which can be mitigated through diversification.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility.

Systematic Risk

The inherent risk that affects the entire market or economy, and cannot be avoided through diversification.