Mode

Definition

The mode is the value that appears most frequently in a data set. In finance, it can be used to identify the most common outcome or price level within a given period.

5 Must Know Facts For Your Next Test

1. The mode is not affected by extreme values or outliers.
2. A data set can have more than one mode, which is known as bimodal or multimodal.
3. If no number repeats, the data set has no mode.
4. The mode is useful for categorical data where we wish to know the most common category.
5. The mode can provide insights into market sentiment and consumer behavior when analyzing financial data.

Review Questions

• What distinguishes the mode from the mean and median?
• How would you identify the mode in a given financial data set?
• Can a data set have more than one mode? Explain with an example.

Related terms

Mean:

The average of a set of numbers, calculated by adding them together and dividing by the count of numbers.

Median:

The middle value in a list of numbers sorted in ascending or descending order.

Range:

The difference between the highest and lowest values in a data set.