You are an analyst at Astra Fund of Funds, but instead of believing that there are two
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You are an analyst at Astra Fund of Funds, but instead of believing that there are two or three types of portfolio managers, your latest model classifies managers into four categories. Managers can be underperformers, in-line performers, stars, or superstars.
In any given year, these managers have a 40%, 50%, 60%, and 80% chance of beating the market, respectively. In general, you believe that managers are equally likely to be any one of the four types of managers. After observing a manager beat the market in three out of five years, what do you believe the probability is that the manager belongs in each of the four categories?
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Related Book For
Quantitative Financial Risk Management
ISBN: 9781119522201,9781119522263
1st Edition
Authors: Michael B. Miller
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