CFA Practice Question

Investors avoid a negatively skewed distribution because ______
A. the mode is less than the mean, which in turn is less than the median.
B. the mode is greater than the mean, which in turn is greater than the median.
C. the mean is less than the median, which in turn is less than the mode.
Explanation: This is the definition of a negatively skewed distribution.

User Comment
baroyan Positively skewed:

Mean > Median > Mode
george2006 negative skewed distribution means that it has long tails on the negative side ( left) and short tail on the positive side (right).
vadklim Good hint "while skewing a distribution to left / right you're pooling the mean to the same direction and the mode remains at the same position"
boddunah negatively skewed = mean< median< mode.
positively skewed = mode< median< mean.
erinelize Regardless of which way it is skewed, the median is always in the middle (think of it alphabetically), so only C can be right in this case.
Sam123456 The mode is the most frequent (or most common) observation so it will always appear at the "crest" of the curve, the highest part of the bump. Median is the middle observation, hence it is in the middle. This might help to remember the order.
Sam123456 And the mean is always pulled furthest towards the direction of skewing (to the far left in the case of a negatively skewed distribution)
dariorf7 Positively skewed: Mean > Median > Mode
Negatively skewed: Mean < Median < Mode