Question

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

Money Market   Five-Year CD
5.36   5.96
5.32   5.90
5.29   5.83
5.31   5.84
5.25   5.79

A.

For​ one-year CDs and​ five-year CDs, separately compute the​ variance, standard​ deviation, range, and coefficient of variation. B. Choose the correct answer below. A.The two investments have approximately the same variation since the difference in their standard deviations is less than 0.1. B.​Five-year CDs have more variation because they have a higher​ variance, standard​ deviation, range, and coefficient of variation. C.​One-year CDs have more variation because they have a lower​ variance, standard​ deviation, range, and coefficient of variation. D.It cannot be determined.

Answer 1

Part A)

The calculation table is

						Total
X	5.36	5.32	5.29	5.31	5.25	26.53
X2	28.7296	28.3024	27.9841	28.1961	27.5625	140.7747

For One year CD :

Range : Max. -Min. = 5.36-5.25 =0.11

Variance

Standard deviation

Sample Mean

Coefficient of Variation

For Five Year CD

Range = Max. - Min. = 5.96-5.79 = 0.17

The calculation table is

Y	5.96	5.90	5.83	5.84	5.79	29.32
Y2	35.5216	34.81	33.9889	34.1056	33.5241	171.9502

Variance

Standard deviation

Sample Mean

Coefficient of variation :

Part B) Answer: B.​Five-year CDs have more variation because they have a higher​ variance, standard​ deviation, range, and coefficient of variation.