A pension plan executive says, One hundred percent of our portfolio managers are hired because they have

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A pension plan executive says, "One hundred percent of our portfolio managers are hired because they have above-average performance records relative to their benchmarks. We do not keep portfolio managers who have below-average records. And yet, each year about half of our managers beat their benchmarks and about half do not. What is going on?" Give a possible statistical explanation.
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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Quantitative Investment Analysis

ISBN: 978-1119104223

3rd edition

Authors: Richard A. DeFusco, Dennis W. McLeavey, Jerald E. Pinto, David E. Runkle

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