- CFA Exams
- CFA Level I Exam
- Study Session 2. Quantitative Methods (1)
- Reading 7. Statistical Concepts and Market Returns
- Subject 10. Kurtosis in Return Distributions
CFA Practice Question
Which of the following statements is true?
B. Kurtosis varies from normal distribution to normal distribution.
C. A normal distribution may be leptokurtic or platykurtic.
D. It is not unusual for a sample of 100 or larger taken from a normal distribution to have excess kurtosis greater than 1.
A. For large samples, we obtain excess kurtosis by subtracting 3 units from kurtosis.
B. Kurtosis varies from normal distribution to normal distribution.
C. A normal distribution may be leptokurtic or platykurtic.
D. It is not unusual for a sample of 100 or larger taken from a normal distribution to have excess kurtosis greater than 1.
Correct Answer: A
For large samples, we obtain excess kurtosis by subtracting 3 units from kurtosis. All the other statements are incorrect. All normal distributions have kurtosis equal to 3. A normal distribution is mesokurtic, not leptokurtic or platykurtic. For a sample of 100 or larger taken from a normal distribution, excess kurtosis greater than 1 is considered unusually large.
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