Question 1
A financial services company is analyzing loan application processing times. The data is heavily skewed to the right due to a few very complex applications that take significantly longer. Which measure of central tendency would provide the most representative value for a typical application's processing time?
Answer and explanation
Correct answer: B
The median is the most appropriate measure of central tendency for skewed data. The mean is sensitive to outliers and extreme values, so the few complex applications would pull the mean higher, making it unrepresentative of a 'typical' value. The median, being the middle value, is not affected by these extreme values and thus provides a more accurate representation of the central point in a skewed distribution.