CFA Practice Question
Which is true of all skewed distributions?
II. Their mean and median are not equal.
III. They are characterized by many small values and a few big values.
I. They are not symmetrical.
II. Their mean and median are not equal.
III. They are characterized by many small values and a few big values.
A. II and III.
B. I, II and III.
C. I and II.
Explanation: A skewed distribution is not symmetrical and its mean and median are not equal. While a positively skewed distribution is characterized by many small values and a few big values, the opposite is true of negatively skewed distributions. So III is false as far as "all skewed distributions" are concerned.
User Contributed Comments 5
| User | Comment |
|---|---|
| Kunga | I wish there was some clarification about "small" and "big" values. Statement III can be thought of differently depending on if the question means absolute or relative values. |
| Sheeb | Yeah, I got hung up on the "big" & "small" values too. I was thinking isn't that WHY it's skewed but I see what they mean. |
| farhan92 | i just though by big they meant outliers (largely negative or largely positive)! |
| GBolt93 | very misleading. I would consider a highly negative number large not small. E.g. stock market is negatively skewed because of large losses. |
| nickcoulby | Impossible to know the interpretation on this |