If one calculated a standard deviation of 18.38% for a security with an expected return of 9.19%, how would one explain the importance and message of these statistical moments to an political science major? What does skew and kurtosis add, if anything, to the distribution discussion? Link the concept to a black swan event to this discussion. Finally, what is the definition of an excess market return in the equity markets?

Under what circumstances would one apply degrees of freedom to the variance and standard deviation formulas? With respect to standard deviation and variance, what happens to the degrees of freedom modifier when the n increases materially? How should one interpret the Sharpe ratio, and why is it important (i.e., what investment elements does it link)?