A stock analyst is comparing the interquartile range of the day's stock prices of Stock A and Stock B. Stock A has an interquartile range of 3, and Stock B has an interquartile range of 11. What interpretation can be made from the interquartile range of each stock?

• The stock price for Stock B is higher than the price for Stock A.
• Stock A has more variability than Stock B.
• The price of Stock B is higher than the price of Stock A by 7.
• Stock B has more variability than Stock A.

1 answer

The correct interpretation from the interquartile ranges of Stock A and Stock B is:

  • Stock B has more variability than Stock A.

The interquartile range (IQR) measures the spread of the middle 50% of a data set. A larger IQR indicates that the data points are more spread out, implying greater variability. Since Stock B has an IQR of 11 and Stock A has an IQR of 3, this shows that Stock B displays more variability in its stock prices compared to Stock A.

The other statements are not accurate interpretations based on the interquartile range:

  • The stock price for Stock B being higher than Stock A cannot be inferred from the IQR alone.
  • Stock A does not have more variability; in fact, it has less.
  • The statement about the price difference does not relate to the IQR.