It Is Very Hard to Statistically Verify Abnormal Fund Performance

question 2

Multiple Choice

It is very hard to statistically verify abnormal fund performance because of all except which one of the following?

• A)Inevitably some fund managers experience streaks of good performance that may just be due to luck
• B)The noise in realised rates of return is so large as to make it hard to identify abnormal performance in competitive markets
• C)Portfolio composition is rarely stable long enough to identify abnormal performance
• D)Even if successful, there is really not much value to be added by active strategies such as market timing

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Definitions:

Allowance for Doubtful Accounts

An estimation of the accounts receivable that a company does not expect to actually collect, reflecting potential losses.

Gross Amount

The total of all amounts before any deductions are made, such as taxes or discounts.

Retailer

A business that sells goods directly to consumers, typically operating out of physical stores or online platforms.

Note Receivable

An asset account on a company's balance sheet representing a promise by a debtor to pay a certain amount of money to the company in the future.