EXAMPLE 2.9.10

A number of people invested $1000 each in the Gomer Family of Mutual Funds. The frequency table below shows the current values of those investments after Gomer hit the trifecta at the dog track, and hit the Cash 5 jackpot.

Compute the mean, median and mode.

VALUEFREQUENCY
Value 0Frequency 48
Value 50Frequency 42
Value 75Frequency 31
Value 100Frequency 28
Value 150Frequency 22
Value 2,876,423Frequency 1

 

EXAMPLE 2.9.10 SOLUTION

n = 48 + 42 + 31 + 28 + 22 + 1 = 172

 

mode = $0 because 0 is the value with the greatest frequency.

 

mean = [(48 times 0) plus (42 times 50) plus (31 times 75) plus (28 times 100) plus (22 times 150) plus (1 times 2,876,423)] divided by 172
= 2,886,948 divided by 172
= $16,784.48

 

 

median:

(n + 1) divided by 2 = 86.5

The median will be the average of the 86th and 87th numbers in the ordered distribution.

The first 48 numbers in the distribution are zeroes, and the next 42 numbers are fifties; in particular, the 86th and 87th numbers are both 50.

The median is $50.