Skewness

[Practice Problems] Two portfolios have unimodal return distributions. Portfolio 1 has a skewness of 0.77, and Portfolio 2 has a skewness of –1.11. Which of the following is correct?

A.  For Portfolio 1, the median is less than the mean.

B.   For Portfolio 1, the mode is greater than the mean.

C.   For Portfolio 2, the mean is greater than the median.

[Solutions] A

Portfolio 1 is positively skewed, so the mean is greater than the median, which is greater than the mode.