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QUESTION 39 Which of the following is true? a. Survivorship bias is a downward bias resulting...

QUESTION 39

  1. Which of the following is true?

a.

Survivorship bias is a downward bias resulting from including only returns of surviving investment funds.

b.

Backfill bias results from including previous return data for funds that enter the index which results to artificially high projected returns.

c.

Survivorship bias is a downward bias resulting from excluding only returns of surviving investment funds. The surviving investments are taken as outliers or anomalies.

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Answer #1

b) Backfill bias results when new funds are added to index and historical returns are considered. This results in artificially high returns

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