CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

If a distribution exhibits positive skewness, then the mean most likely is located to the ______.
A. left of both the median and mode
B. left of the median and right of the mode
C. right of both the median and mode
Explanation: A positively skewed distribution has a long tail to the right, with a large frequency of observations occurring in the left part of the distribution. For a distribution of returns, this means frequent small losses and a few extreme gains. The result is that the extreme gains pull the mean to the right while the mode resides on the left with the bulk of the observations. The median falls between the mean and the mode.

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