REM250:

STATISTICS FOR REAL ESTATE

MEASURE OF DISPERSION

Dr Nor Nazihah Chuweni

UiTM Perak, Malaysia
 AGENDA

• Standard deviation
• Coefficient of variation (relative dispersion)
• Measure of skewness
 INTRODUCTION

• Risk involves the uncertainty of a future outcome. In investment (including

property investment), the risk in the form of variability is measured by
standard deviation.
• The larger the variability of returns, the larger the risk of investment. This
variability is best measured by using standard deviation, the coefficient of
variation and range.
 What is dispersion?
• Refer to page 120
• Previously, we learn about mean, median and mode as measure of central
tendency (a.k.a measure of central location) of a distribution.
• Dispersion provide additional information on the reliability of the measure
of central tendency.
• If data widely dispersed, the central tendency is said to be less
representative of the data as a whole – should not be used for decision
making.
• The central location for data with little dispersion is considered more
reliable.
 VARIANCE & STANDARD DEVIATION

❑Refer to page 133.

❑Standard deviation is the square root of the variance.

EXAMPLE
❑Refer to page 133
❑Calculate the variance and standard deviation.

Age (years) Number of workers

21-25 10
26-30 35
31-35 16
36-40 14
41-45 13
46-50 10
51-55 3
Age (years) Number of Mid point fx fx2
workers
21-25 10 23 230 5,290

26-30 35 28 980 27,440

31-35 16 33 528 17,424

36-40 14 38 532 20,216

41-45 13 43 516 22,188

46-50 10 48 480 23,040

51-55 3 53 159 8,427

N =100 3,425 124,025

Variance =
1 124,025 - 34252
• 100 – 1 100

• 67.87
• Std deviation, s is the square root of variance. Therefore, s is 8.24.
 TUTORIAL

• Which of the following distribution (data

A or B) is more representative of the data
as whole and likely to be used in the
decision making? Why?
 TUTORIAL
• Q6 page 135
• A market researcher surveyed a sample of 170 listeners of rock music and
obtained the following age distribution as shown in Table below:
Age (years) Number of listeners
15-19 9 Find the
20-24 16
25-29 27
• Mean
• Mode
30-34 44
• Median
35-39 42 • Variance
40-44 23 • Standard
45-49 7 deviation
50-54 2
 TUTORIAL
QUESTION 2
A property consultant has conducted a market survey on a sample of 120 potential buyer in residential scheme in
Dungun, Terengganu and obtained the following age distribution.
i) From the data given, draw a less than ogive on a graph paper.
(5 marks)
ii) Calculate the median and explain its meaning.
(5 marks)
iii) Calculate the mean and explain its meaning.
(5 marks)
iv) Calculate the mode and explain its meaning.
(5 marks)
vi) Compute the standard deviation for the above data.
(5 marks)
Age (years) Number of potential buyers
21-25 9
26-30 12
31-35 26
36-40 23
41-45 16
46-50 14
51-55 12
56-60 8