- CFA Exams
- CFA Level I Exam
- Study Session 18. Portfolio Management (1)
- Reading 52. Portfolio Risk and Return: Part I
- Subject 2. Variance and Covariance of Returns

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**CFA Practice Question**

The distribution of a high-risk stock would tend to be ______.

B. normal

C. skewed

D. flat

E. lognormal

A. peaked

B. normal

C. skewed

D. flat

E. lognormal

Correct Answer: D

A flat distribution means that there is a wide set of possible outcomes and the most risk.

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**User Contributed Comments**
9

User |
Comment |
---|---|

myanmar |
i thougt it would be peaked because of fat tailes |

akanimo |
peaked cant be right because that means that the majority of the area under the curve will be at a central point and the tails would be very thin (low probabilities) ... this would point more to low volatility which is low risk |

alki |
risky stock means higher stnd deviation, higher the deviation from the mean, flatter the distribution |

fahad |
Good one Alki |

BigJimStud |
more peaked = less distribution from the mean more flat = more distribution away from the mean |

loisliu88 |
what about skewed. |

bantoo |
It is really a very smart question. |

johntan1979 |
Very easy to understand if you can imagine flat distribution as the possibility of getting -100% to +infinity returns ==> super high risk. |

jonan203 |
ie. platykurtic |