Concept 8: Symmetry and Skewness in Return Distributions | IFT World

TESTING WEBSITE FOR IFT. SHOULD NOT BE USED BY STUDENTS AND CUSTOMERS. PLEASE VISIT IFT World

101 Concepts for the Level I Exam

# Concept 8: Symmetry and Skewness in Return Distributions

A distribution is said to be symmetrical when the distribution on either side of the mean is a mirror image of the other. In a symmetrical distribution, mean = median = mode.

If a distribution is non-symmetrical, it is said to be skewed. Skewness can be negative or positive.

positively skewed distribution has a long tail on the right side, which means that there will be frequent small losses and few large gains.  Here the mean > median >mode. The extreme values affect the mean the most which is pulled to the right. They affect the mode the least.

negatively skewed distribution has a long tail on the left side, which means that there will be frequent small gains and few large losses. Here the mean < median < mode. The extreme values affect the mean the most which is pulled to the left. They affect the mode the least.

Hey visit this link. Crash course on live website

New Free Course: Get 1 Full topic. Videos, Notes, Questions. Click here: Level I Level II Level III

Get a Free Topic for all Levels
Holler Box