- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 3. Statistical Measures of Asset Returns
- Subject 3. Measures of Shape of a Distribution
CFA Practice Question
Which is true of positively skewed distributions?
II. Their downside is less frequent but more unlimited.
III. They are attractive to investors because their mean is larger than their median.
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.
A. III
B. I and III
C. II
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 |