CFA Practice Question

There are 410 practice questions for this study session.

CFA Practice Question

In computing kurtosis, which of the following is true?

I. It raises the deviation from the mean to the fourth power.
II. The formula preserves the direction of the deviation.
III. Kurtosis measures how clustered the values in a distribution are to the mean.
A. I and II
B. I and III
C. I, II and III
Explanation: I is true. II is false because the fourth power of a negative number is not a negative number. III is true.

User Contributed Comments 4

User Comment
katen It looks like the answer doesn't fit the explanation or am I reading this wrong?
julamo You're reading this wrong. The fourth power of a number will always be positive, regardless of whether the number is positive or negative... So II is false since a negative deviation will end up positive in Kurtosis
Profache Statement II would be true if the question had asked to compute the Skewness.
abs013 You know I is true because it's in all the choices
You need to log in first to add your comment.