The data below represent the nationwide highest yields for one-year CDs and five

Question

The data below represent the nationwide highest yields for one-year CDs and five-year CDs.

One-Year

CD

Five-Year

CD

5.345.34

5.955.95

5.325.32

5.905.90

5.305.30

5.845.84

5.315.31

5.845.84

5.255.25

5.805.80

a.

For one-year CDs and five-year CDs, separately compute the variance, standard deviation, range, and coefficient of variation.

b.

Based on the results of (a), doone-year CDs or five-year CDs have more variation in the highest yieldsoffered? Explain.

One-Year

CD

Five-Year

CD

5.345.34

5.955.95

5.325.32

5.905.90

5.305.30

5.845.84

5.315.31

5.845.84

5.255.25

5.805.80

Explanation / Answer

Ans:For 1 yr CD:

variance=0.000904

Cofficient of variation=std dev/mean=(0.0301/5.309)*100=0.5663

Range=5.345-5.255=0.09

For 5 yr CD:

Variance=0.002784

Cofficient of variation=std dev/mean=(0.0528/5.871)*100=0.8987

Range=5.955-5.805=0.15

As, standard deviation,CV,range are higher for 5 yr CD,hence 5 yr CD have more variation in highest yoeld offered.

1 yr (x-mean)^2 5.345 0.001296 5.325 0.000256 5.305 1.6E-05 5.315 3.6E-05 5.255 0.002916 Mean= 5.309 0.00452 std dev= 0.0301

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