Percentiles

Definition

Percentiles are measures that indicate the relative standing of a value within a data set. They divide the data into 100 equal parts, showing the percentage of data points that lie below a particular value.

5 Must Know Facts For Your Next Test

1. The 50th percentile is also known as the median, which splits the data set in half.
2. Percentiles are often used in finance to assess the performance of investments compared to a broader market.
3. The 25th percentile and 75th percentile are known as quartiles and help in understanding the spread of data.
4. Percentiles can be used to identify outliers by examining values at extreme ends (e.g., below the 5th percentile or above the 95th percentile).
5. Calculating percentiles requires arranging data in ascending order before determining the specific position of interest.

Review Questions

• What is the 50th percentile commonly referred to as?
• How are percentiles useful in assessing investment performance?
• Which percentiles are known as quartiles?

Related terms

Quartile:

A type of percentile that divides data into four equal parts, specifically at the 25th, 50th, and 75th positions

Median:

The middle value that separates a data set into two equal halves, corresponding to the 50th percentile

Outlier:

A data point significantly different from other observations, which can often be identified by looking at extreme percentiles