Auto Insurance the Insurance Institute for Highway Safety Publishes Ratings

question 661

Essay

Auto insurance The Insurance Institute for Highway Safety publishes ratings for all
models of vehicles to compare the relative risk of payouts. 100 is the mean rating for all
vehicles. A rating of 122 means the vehicle is 22% worse than average. The table at the
right shows the summary statistics for the collision ratings of 27 midsize cars. $$\begin{array} { | l | r | } \hline \text { Min } & 57 \\\text { Q1 } & 99 \\\text { Median } & 109 \\\text { Q3 } & 122 \\\text { Max } & 173 \\\text { Mean } & 110.9 \\\text { SD } & 23.99 \\\hline\end{array}$$
a. Were any of the ratings outliers? Show how you made your decision.
b. A histogram of the data is shown. Is it more appropriate to use the mean and standard
deviation, or the median and IQR to describe these data? Explain.

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Definitions:

Sustainable Rates Growth

The peak growth rate a firm can achieve in its earnings without resorting to more debt financing or selling additional shares.

External Funding Needs

The amount of money a company needs to raise from outside sources to finance its operations or growth plans.

Negative External Financing

A situation where a company is reducing its external borrowing and financing activities, possibly indicating a shift towards internal funding methods.

External Financing Need

The amount of funding a firm requires from external sources to finance its planned investment or business activities beyond what is generated internally.