Why follow skewed distribution instead normal distribution

Reference no: EM13108816

Investment A has the expected return of $25MIL and Investment B has expected return of $5MIL. Market risk analysts think standard deviation of return from A is $10MIL and for B is $30MIL (negative returns are possible).

(a) If you suppose returns follow normal distribution, which investment would give better chance of getting at least a $40MIL return and describe why.

(b) How could the answer in question (a) change if you knew returns followed skewed distribution instead of normal distribution? Describe briefly.

Reference no: EM13108816

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