The Advantage of Using Mean Absolute Deviation Rather Than Variance

question 119

Multiple Choice

The advantage of using mean absolute deviation rather than variance as a measure of dispersion is that mean absolute deviation ________.

• A) is less sensitive to extreme deviations
• B) requires fewer observations to be a valid measure
• C) is a relative measure rather than an absolute measure of risk
• D) considers only unfavorable (negative) deviations from the mean

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Definitions:

Operating Revenues

The income earned from a company's primary business activities, excluding one-time or unusual expenses or incomes.

Variable Operating Costs

Expenses that vary in direct proportion to the level of production or sales volume.