CPIM Practice Exam

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What does a variance measure in statistics?

The average of a dataset
The standard deviation of data
The dispersion of data
The median value of data

The correct answer is: The dispersion of data

A variance measures the dispersion of data points in a dataset from their mean. It provides a numerical value that represents how far the individual data points are spread out from the average value of the dataset. High variance indicates that data points are widely spread out, while low variance suggests they are closer to the mean. This characteristic makes variance a key concept in understanding the overall variability and reliability of data in statistical analysis. The other choices do not accurately define variance. For instance, the average is a measure of central tendency, indicating a typical value within the dataset, while standard deviation, although related to variance, measures the amount of variation or dispersion in a set of values. The median represents the middle value in a dataset when arranged in order, not its spread. Therefore, focusing on the dispersion of data correctly identifies variance's primary role in statistics.