When Testing Mutual Fund Performance Over Time One Must Be

question 35

Multiple Choice

When testing mutual fund performance over time one must be careful of ___________,which means that a certain percentage of poorer performing funds fail over time which makes the performance of remaining funds seem more consistent over time.

• A) survivorship bias
• B) lucky event bias
• C) magnitude bias
• D) mean reversion bias

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Definitions:

Cash Balance

The amount of cash on hand or in bank accounts, immediately available to a business or individual.

Cash Disbursements

Money paid out by a business in the course of its operations, such as paying for expenses, purchasing assets, or repaying loans.

Cash Receipts

The collection of cash, typically from sales, services, or other forms of income.

Accounts Receivable

Accounts receivable represents money owed to a company by its customers for goods or services delivered but not yet paid for.