Wednesday, June 3, 2015

skewness - The possible preferences of investors for higher than first 2 moments of return distribution?


Can anyone explain in an intuitive manner a justification for possible preferences of investors for moments of return distribution beyond the first two moments (i.e. mean and variance). For example, why it is often argued that positive skewed distributions are preferred to negative ones? Is it related to known concept of risk aversion?




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