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Measures of Central Tendency & Dispersion, Skewness, Kurtosis
What is the arithmetic mean and why is it the most commonly used measure of central tendency in banking statistics?
The arithmetic mean is the sum of all values divided by the number of observations. It is widely used in banking for computing average loan sizes, average interest rates, and portfolio metrics because it accounts for every data point.
What is the formula for calculating arithmetic mean of ungrouped data?
Sum of all values divided by number of observations
How is the weighted arithmetic mean different from the simple arithmetic mean?
The weighted mean assigns different weights to each observation based on its relative importance, whereas the simple mean treats all values equally. In banking, it is used to compute the weighted average cost of funds where each liability carries a different weight.
Which measure of central tendency is not affected by extreme values?
Median is not affected by extreme values
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