CFA Level I · CFA Level I Exam · Portfolio Risk and Return: Part I
A return distribution has a mean above its median and a long tail to the right. This distribution is best described as:
The distribution is positively skewed. A long right tail with a few large gains pulls the mean above the median. Negatively skewed distributions have the opposite pattern, with the mean below the median, and symmetric distributions have equal mean and median.
- Anegatively skewed
- Bpositively skewedCorrect
- Csymmetric
Explanation
With positive skew, a few large positive returns pull the mean above the median and extend the right tail. Negative skew has the mean below the median. A symmetric distribution has mean equal to median.
Did you get it right without looking?
One question tells you little. A timed set on Portfolio Risk and Return: Part I shows your real accuracy, how long you take and where you lose marks.
More Portfolio Risk and Return: Part I questions
- Two investors hold portfolios on the same capital allocation line, but Investor X holds a higher proportion in the risky portfolio than Inve…
- Compared with a combination of two risky assets with correlation of +0.5, the same two assets with a correlation of -0.3 will most likely pr…
- An investor has a risk-aversion coefficient A = 5 and compares two portfolios using U = E(R) − 0.5Aσ². Portfolio X has E(R) = 12% and σ = 18…
- An analyst observes that the correlation between the returns of two assets is zero. The analyst's conclusion that is most accurate is that t…
- Two risky assets have a correlation of +1.0 between their returns. A portfolio is formed by combining them in positive weights. The standard…
- A portfolio returned +50% in Year 1 and −20% in Year 2. The geometric mean annual return is closest to: