Question

A sample of customers from Barnsboro National Bank shows an average account balance of $315 with a standard deviation of $87.A sample of customers from Wellington Savings and Loan shows an average account balance of $8350 with a standard deviation of $1800.Which statement about account balances is correct?A) Barnsboro Bank has more variation.B) Wellington S&L has more variation.C) Both have the same variation.

Answer 1

A) Barnsboro Bank has more variation.

Explanation:

Coefficient of Variation:

The coefficient of variation is given by the division of the standard deviation by the mean.

In this question:

The account balance with the highest coefficient of variation has more variation.

Barnsboro National Bank shows an average account balance of $315 with a standard deviation of $87.

So

`cv = (87)/(315) = 0.2762`

Wellington Savings and Loan shows an average account balance of $8350 with a standard deviation of $1800.

So

`cv = (1800)/(8350) = 0.2156`

Barnsboro Bank has the higher cv, so more variation, and the answer is given by option A.