3.13 Is there a difference in the variation of the yields of differ- ent types o

Question

3.13 Is there a difference in the variation of the yields of differ- ent types of investments? The file CD Rate contains the yields for one-year certificates of deposit (CDs) and five-year CDs for 22 banks in the United States, as of March 12. 2014. Source: Data extracted from www.Bankrate.com, March 12. 2014 a. For one-year and five-year CDs, separately compute the vari- ance, standard deviation, range. and coefficient of variation. b. Based on the results of (a), do one-year CDs or five-year CDs er have more variation in the yields offered? Explain.

Explanation / Answer

We have given that data from bankrate site.

We have to find summary statistics of one year and five year CDs.

We can find summary statistics by using MINITAB.

Steps :

ENTER data into MINITAB sheet --> STAT --> Basic Statistics --> Display descriptive statistics --> Variables : select two variables --> Statistics --> select all that apply --> ok --> ok

a)

Descriptive Statistics: One-Year, Five-Year

Statistics

b) CV(one year) = 44.46

CV(two year) = 20.35

We can see that,

CV(one year) > CV(two year)

The CV for one year is more variable while CV for two year is more consistent.

Variable StDev Variance CoefVar Range One-Year 0.3042 0.0925 44.46 0.9500 Five-Year 0.2996 0.0898 20.35 1.3000

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