CFA Level I · CFA Level I Exam · Statistical Characteristics of Asset Returns
For a unimodal, negatively skewed distribution of returns, the relationship among the mean, median and mode is most likely:
For a unimodal negatively skewed distribution, the mean is less than the median, which is less than the mode. The long left tail pulls the mean down furthest, the median sits in between, and the mode lies at the peak on the right.
- Amean < median < modeCorrect
- Bmean = median = mode
- Cmode < median < mean
Explanation
In a negatively skewed distribution the long tail is on the left, which drags the mean down the most. The median lies between, and the mode is at the peak on the right, giving mean < median < mode. The reverse ordering describes positive skew.
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