Evaluating Skewness and Kurtosis in Investment Returns

Very Hard Statistical Concepts And Returns Skewness And Kurtosis

Consider a distribution of investment returns over the past five years that has exhibited a skewness of -2 and a kurtosis of 6. A financial analyst is evaluating the implications of these statistics on the risk and return profile of this investment. In the context of skewness and kurtosis, please determine which of the following statements about the distribution of returns is correct.

The negative skewness indicates that the distribution has a long left tail, suggesting the potential for extreme negative returns.

The kurtosis of 6 indicates a distribution that is closer to a normal distribution and displays moderate tails.

The negative skewness and high kurtosis together imply the returns are symmetrically distributed with fat tails.

Hint

Submitted2.9K

Correct2.9K

% Correct98%