Identify the firm associated with Boinic’s Type I and Type II error. Justify your selection for each error type, discussing the psychological effects of its Year 1 performance on Boinic.

Boinic Corporation introduced an employee pension plan and set aside $20 million to fund the plan. Assessing five investment management firms, A through E, and expecting all to perform in line with their benchmarks, Boinic selected three firms (A, D, and E) to manage part of the pension plan assets. Exhibit 1 shows the managers’ performance compared to their benchmark in the one year after being selected.

Transcribed Image Text:

Identify the firm associated with Boinic's Type I and Type II error. (Circle one for each error type) Type I Error Firm A Firm B Justify your selection for each error type, discussing the psychological effects of its Year 1 performance on Boinic. Firm C Firm D Firm E Type II Error Firm A Firm B Firm C Firm D Firm E