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What is the implication of negative skew in a return distribution? A) The return distribution has longer and fatter right tail than the left tail.

What is the implication of negative skew in a return distribution?

A) The return distribution has longer and fatter right tail than the left tail.

B) There are higher probabilities to get large negative returns than do positive returns if the market becomes very volatile.

C) There are higher probabilities to get large positive returns than do negative returns if the market becomes very volatile.

D) The volatility of the returns tends to be small in the negatively skewed distribution.

5. Does the Normal Distribution of the returns on an asset work well in the volatile time (ie., when the market is uncertain) to assess the riskiness of the asset?

A) Yes

B) No

C) Not related

7. Given other parameters known, an effective diversification is determined by the weights on assets and the correlation coefficient between the two asset return series. Diversification is most effective when asset returns are

A) High

B) Negatively correlated

C) positively correlated

D) Uncorrelated

9. On a standard expected return versus standard deviation graph, investors will prefer portfolios that lie to the ______ of the current investment opportunity set.

A) Left and above

B) Left and below

C) right and above

D) right and below

E) Center

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