Distribution with the same variance as normal distribution

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Reference no: EM132020727

1. Consider a distribution with the same variance as a normal distribution and with the kurtosis greater than 3. Carefully define all relevant concepts and explain which of the following statements is true or wrong:

a. It has fatter tails than normal distribution.

b. It has thinner tails than normal distribution.

c. It has the same tail fatness as the normal distribution, since variances are the same.

How would your answer change if the distribution in the question has a lower variance? Illustrate your answer with a graph.

2. Which one of the following is the rate that most international banks charge when they loan Eurodollars to other banks?

ADR

LIBOR

Cross-rate

Gilt rate

Swap rate

Reference no: EM132020727

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