Question

Which of the following are true about fat tail distribution:

1. They are a good model for some financial data.

2.the mean is a good representation of the distribution.

3.they are the best choice for the most type of data. ​

Answer 1

Answer:

THE CORRECT OPTION IS 2

Explanation:

PLS MARK AS BRAINLIST

Answer 2

The true statement about fat tail distribution is that they are a good model for some financial data.

• The statements can be categorised true/false as -

1. They are a good model for some financial data - True

1. Financial data and other data types where extreme events occur more frequently than a normal distribution would frequently exhibit fat tail distributions.
2. Such occurrences include pandemics, natural disasters, and stock market crashes.

2. the mean is a good representation of the distribution. - False

1. The mean does not accurately depict a distribution with this distribution and might not correctly reflect the distribution's central tendency.
2. This is because these distributions have a larger likelihood of severe events than a normal distribution does.
3. Other metrics, like the median or mode, might be a better choice.

3. they are the best choice for the most type of data. ​- False

1. For the majority of data types, fat tail distributions are not the ideal option.
2. A normal distribution or another kind of distribution may be better appropriate in many situations.
3. Only when extreme occurrences happen more frequently than would be predicted by a normal distribution are fat tail distributions relevant.

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