If a distribution has "fat tails," it exhibits

A) positive skewness.
B) negative skewness.
C) a kurtosis of zero.
D) kurtosis.
E) positive skewness and kurtosis.

Fat Tails

Refers to the occurrences of extreme movements in stock prices or higher than normal risks in investments, which lead to heavy tails in a probability distribution.

Kurtosis

Measure of the fatness of the tails of a probability distribution. Indicates probability of observing extreme high or low values.

Skewness

A measure of the asymmetry of the probability distribution of a real-valued random variable about its mean.