An analyst gathered the following information about the return distributions for two portfolios during the same time period:
Portfolio     Skewness            Kurtosis
A                   -1.6                          1.9
B                    0.8                           3.2
The analyst states that the distribution for Portfolio A is more peaked than a normal distribution and that the distribution for Portfolio B has a long tail on the left side of the distribution. Which of the following is correct?
A. The analyst’s assessment is correct.
B. The analyst’s assessment is correct for Portfolio A and incorrect for portfolio B.
C. The analyst’s assessment is incorrect for Portfolio A but is correct for portfolio B.
D. The analyst is incorrect in his assessment for both portfolios.
Answer:D
The analyst’s statement is incorrect in reference to either portfolio. Portfolio A has a kurtosis of less than 3, indicating that it is less peaked than a normal distribution (platykurtic). Portfolio B is positively skewed (long tail on the right side of the distribution).