The Available Evidence Indicates That

question 51

Multiple Choice

The available evidence indicates that

• A)about one-half of all managers of active mutual funds consistently outperform index funds.
• B)outperforming the market on a consistent basis is extremely difficult to do.
• C)there is little truth to the notion that there is a trade-off between risk and return.
• D)there is little truth to the efficient markets hypothesis.

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Definitions:

Self-fulfilling Prophecy

When persons behave toward another person according to a label (impression) and cause the person to respond in ways that confirm the label.

Stereotype Threat

The suspicion a member of a group holds that he or she will be judged based on a common stereotype of the group.

Confirmation Bias

The tendency to focus on information relevant to a belief and ignoring or downplaying information that is inconsistent with that belief.

Anchoring and Adjustment

A cognitive bias where individuals rely too heavily on an initial piece of information (the "anchor") when making decisions, with adjustments made too conservatively.