CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

Which is true of positively skewed distributions?

I. They have a limited, but frequent, upside.
II. Their downside is less frequent but more unlimited.
III. They are attractive to investors because their mean is larger than their median.
B. I and III
Explanation: I and II are false. The correct statements would be: 1) positively skewed distributions have a limited, but frequent, downside, and 2) they have a less frequent, but more unlimited, upside. III is true.

User Contributed Comments 3

User Comment
Trev186 Why would this be more attractive to investors? If it is positively skewed that means most returns are in the negative with a few more extreme ones in the positive. It is speculative not attractive..
CraigSaba less risk of disasterous returns
soukhov upside cannot be limited,
downside cannot be unlimited - you cant fall below the floor
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