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Answer: The analyst is incorrect in his assessment for both portfolios.
## Explanation Let's analyze each portfolio: **Portfolio A:** - Skewness = -1.6 (negative skew) - Kurtosis = 1.9 For a normal distribution, kurtosis = 3. A kurtosis of 1.9 indicates a **platykurtic** distribution (less peaked than normal), not more peaked. The analyst is incorrect about Portfolio A. **Portfolio B:** - Skewness = 0.8 (positive skew) - Kurtosis = 3.2 Positive skewness means the distribution has a long tail on the **right side**, not the left side. The analyst is incorrect about Portfolio B. Therefore, the analyst is incorrect for both portfolios.
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An analyst gathered the following information about the return distributions for two portfolios during the same time period:
| Portfolio | Skewness | Kurtosis |
|---|---|---|
| A | -1.6 | 1.9 |
| B | 0.8 | 3.2 |
The analyst states that the distribution for Portfolio A is more peaked than a normal distribution and that the distribution for Portfolio B has a long tail on the left side of the distribution. Which of the following is correct?
A
The analyst's assessment is correct.
B
The analyst's assessment is correct for Portfolio A and incorrect for portfolio B.
C
The analyst's assessment is incorrect for Portfolio A but is correct for portfolio B.
D
The analyst is incorrect in his assessment for both portfolios.
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