Explanation:
Since the median is higher than the mean, the distribution is negatively skewed. If the mean were higher than the median, the distribution would be positively skewed. Since the excess kurtosis is negative, the distribution is plakyurtic or has thinner tails than a normal distribution. Leptokurtic is defined as a distribution that has fatter tails than a normal distribution and would have a positive excess kurtosis.
(Book 2, Module 16.2, LO 16.h)
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Question 79
A consultant at SPA Consulting has been engaged by Limbo Company to select an equity investment manager for their defined benefit pension plan. The consultant is considering Cutter Investments. The money management firm's 10-year performance is as follows: 35.1%, 15.6%, 12.0%, 22.2%, 50.3%, −20.0%, −33.4%, −30.6%, 30.8%, 13.0%. From the data provided, the consultant calculated the following statistics:
| Mean | 9.5% |
| Median | 14.3% |
| Excess kurtosis | −0.9761 |
Indicate whether the returns distribution is positively or negatively skewed and whether the returns distribution is leptokurtic or platykurtic.
A
Skewed: Positively, Kurtosis: Leptokurtic
B
Skewed: Negatively, Kurtosis: Platykurtic
C
Skewed: Positively, Kurtosis: Platykurtic
D
Skewed: Negatively, Kurtosis: Leptokurtic
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