The correct answer is: C. more peaked distribution.
A probability distribution is a graphical representation of the possible outcomes of an event
and their associated probabilities. The expected value of a probability distribution is the average of the possible outcomes, weighted by their probabilities.A more peaked distribution is one in which the possible outcomes are more concentrated around the expected value. This means that there is a smaller chance of extreme outcomes, and a higher chance of outcomes that are close to the expected value.
A less peaked distribution is one in which the possible outcomes are more spread out. This means that there is a higher chance of extreme outcomes, and a lower chance of outcomes that are close to the expected value.
In the context of probability distributions of rates of return, a close outcome to an expected value is shown by a more peaked distribution. This
is because a more peaked distribution indicates that the possible outcomes are more concentrated around the expected value, and there is a smaller chance of extreme outcomes.