CFA Level I · CFA Level I Exam · Statistical Characteristics of Asset Returns
A return distribution has a mean that is greater than its median, and its longer tail extends to the right. This distribution is most likely:
The distribution is positively skewed. A long right tail contains large positive outliers that pull the mean above the median, while the bulk of observations sit to the left. In a negatively skewed distribution the mean would fall below the median.
- Anegatively skewed
- Bpositively skewedCorrect
- Csymmetric
Explanation
In a positively skewed distribution the long tail is on the right, which pulls the mean above the median. A negatively skewed distribution has the mean below the median. A symmetric distribution has the mean equal to the median.
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