59. With respect to relative merits of internal dispersion measures, Walter is least likely correct
about:
A. high/low range.
B. interquartile range.
C. standard deviation.
Answer = B
“Global Investment Performance Standards,” Philip Lawton
2013 Modular Level III, Vol. 6, Reading 43, Section 3.12
Study Session 18–43–n
Evaluate the relative merits of high/low range, interquartile range, and equal-weighted or asset-
weighted standard deviation as measures of the internal dispersion of portfolio returns within a
composite for annual periods.
B is correct. Walter is correct about the high/low range, which is skewed by outliers. He is also
correct that the standard deviation allows for comparability across investment firms. However,
he is incorrect about the interquartile range. Because this measure includes only the middle 50%
of portfolio returns, thus excluding extreme observations, it is not impacted by outliers.
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