IAI Actuarial Core Principles · Actuarial Statistics · Exploratory data analysis
A sample of 5 monthly claim counts is 4, 6, 8, 10, 12. What is the sample variance, using divisor n-1?
The sample variance is 10. The mean is 8, the sum of squared deviations is 40, and dividing by n-1 = 4 gives 10. Dividing by n would wrongly give 8, which is the population-style formula and not the sample variance requested.
- A8.0
- B10.0Correct
- C16.0
- D40.0
- 6.4
Explanation
Mean = 40/5 = 8. Squared deviations: 16+4+0+4+16 = 40. Dividing by n-1 = 4 gives 10. Using divisor n gives 8, which is the main distractor error. 40 is the sum of squares only.
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