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:

The coefficient of variation of a set is given by the following formula

`CV = (S)/(M)`

In which M is the mean and S is the standard deviation.

The higher the coefficient, the higher the variation of the set.

Barnsboro National Bank

`M = 315, S = 87`

So

`CV = (S)/(M) = (87)/(315) = 0.276`

Wellington S&L

`M = 8350, S = 1800`

So

`CV = (S)/(M) = (1800)/(8350) = 0.216`

The Barnsboro National Bank has the highest coefficient, so it has more variation.

The correct answer is:

(A)Barnsboro Bank has more variation.