When Testing Mutual Fund Performance Over Time, One Must Be

question 79

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, making 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:

Mixed-Motive Nature

A characteristic of negotiations where parties have both shared and conflicting interests, requiring cooperation and competition.

Pre-Settlement Settlement

An agreement reached by the parties involved in a dispute before a formal settlement is finalized, often used to expedite resolution.

Legally Binding

An agreement or contract that is valid under the law and can be enforced by the judicial system.

Comprehensive Agreement

A detailed and inclusive arrangement that addresses all relevant issues in a negotiation or dispute.