Studies Appear to Exhibit Mild Evidence That Well Performing Funds

question 35

Multiple Choice

Studies appear to exhibit mild evidence that well performing funds exhibit performance __________,but stronger evidence that poor performing funds __________.

• A) persistence; improve their performance
• B) persistence; continue to perform poorly
• C) reversal; improve their performance
• D) reversal; continue to perform poorly

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Definitions:

Alpha Value

A specified threshold in hypothesis testing that represents the maximum probability of wrongly rejecting the null hypothesis.

Rejecting Null Hypothesis

The decision in hypothesis testing that the evidence is strong enough to conclude a significant effect exists.

Retaining Null Hypothesis

The decision in hypothesis testing that there is not enough evidence to reject the null hypothesis, implying the observed data does not significantly differ from what was expected.

Alpha (α)

Alpha (α) represents the level of significance in hypothesis testing, defining the threshold for rejecting the null hypothesis.