Series 79 practice questioneasyComparable Company Analysis
Which of the following is generally true when interpreting the mean and median multiples from a set of peer companies?
- AThe mean is always higher than the median
- BThe median is unaffected by outliers
- CThe mean can be distorted by outlier values✓ Correct answer
- DBoth mean and median are equally impacted by outliers
Explanation
Why C — The mean can be distorted by outlier values
The mean can be skewed by outliers, while the median provides a more robust measure of central tendency. Thinking both are equally affected is a typical test pitfall.
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