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Chapter 4: Q 120 (page 284)

Initial public offerings (1.3) The business magazine Forbes reports that 4567companies sold their first stock to the public between 1990and 2000. The mean change in the stock price of these companies since the first stock was issued was +111%. The median change was -31%. Explain how this difference could happen.

Short Answer

Expert verified

The mean of given data will be high affected by a few high stock prices change while median will be unaffected by few unusually high stock price changes and this causes mean to be much higher .

Step by step solution

01

Step 1 

when mean is greater than the median because of unusually high changes of stock prices having values above 111%while otherwise most changes are negative . The mean of this data is highly skewed while median somewhat remains unaffected .

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