Answer: Asset A is riskier than asset B.

## Explanation Kurtosis measures the "tailedness" of a probability distribution - specifically, it indicates the presence and frequency of extreme values (outliers) in the data. ### Key Points: - **Higher kurtosis** indicates a distribution with **fatter tails**, meaning there's a higher probability of extreme values occurring - Since both assets have the same mean, variance, and skewness, the only difference is in kurtosis - Asset A having **higher kurtosis** means it has **more extreme returns** (both positive and negative) than Asset B - In financial risk management, **extreme negative returns** represent significant risk - Therefore, Asset A is **riskier** because it has a higher likelihood of experiencing extreme losses ### Why other options are incorrect: - **B**: Incorrect - Asset B has lower kurtosis, meaning fewer extreme returns and thus lower risk - **C**: Incorrect - Mean returns are the same for both assets, and kurtosis doesn't indicate profitability - **D**: Incorrect - Mean returns are the same, and kurtosis doesn't predict long-term negative returns **Conclusion**: Higher kurtosis = higher tail risk = higher overall risk, making Asset A the riskier investment.

Author: Tanishq Prabhu