Quantitative Methods - Quantitative Methods Section 2

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11. The table below summarizes the performance data for three portfolios:

Portfolio Arithmetic mean return(%)Variance of (%)
Portfolio A  16.4%4.9%
Portfolio B  12.6%3.5%
Portfolio C 14.8%4.2%

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12. A distribution more peaked than the normal distribution is best described as being:

  • Option : C
  • Explanation : Leptokurtic describes a distribution that is more peaked than the normal distribution. Platykurtic is a distribution less peaked than a normal distribution. Mesokurtic is a distribution as peaked as the normal distribution.
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13. In a continuous distribution where the graph shows the right tail of the curve to be longer than the left tail is best described as having:

  • Option : C
  • Explanation : A positively skewed distribution appears as if the right tail has been pulled away from the mean.
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14. Which of the following return distribution is most likely characterized by frequent small losses and a few large gains?

  • Option : C
  • Explanation : A positively skewed distribution has frequent small losses and a few large gains. A negatively skewed distribution has frequent small gains and a few large losses. A normal distribution is symmetrical.
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15. Which of the following relationships best characterize a negatively skewed distribution?

  • Option : A
  • Explanation : For a negatively skewed distribution, the mean is less than the median, which is less than the mode.
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