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CA Foundation · Quantitative Aptitude · Statistical Description of Data

A bank in Jaipur asks customers to rate service as Poor, Average, Good or Excellent. These ratings are coded 1, 2, 3 and 4. Which statement about this data is correct?

The ratings are ordinal data. Poor to Excellent follow a meaningful order, but the gaps between successive ratings are not necessarily equal and there is no true zero, so only ranking is valid, not differences or ratios between the codes.

  1. AThe data are ordinal, so the order of codes is meaningful but the gaps between codes need not be equalCorrect
  2. BThe data are nominal, so the codes act only as labels with no order
  3. CThe data are interval, so the difference between ratings 1 and 2 equals that between 3 and 4
  4. DThe data are ratio, so a rating of 4 means twice the satisfaction of a rating of 2

Explanation

The categories can be ranked from Poor to Excellent, so the scale is at least ordinal. The distances between ratings are not defined as equal, so it is not interval, and there is no true zero, so ratios such as 'twice' are meaningless. Calling it nominal ignores the ranking.

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