1. Assume that the ability of funds to beat the market is fixed in dollar terms:
   1. 1) When ranking managers, we consider the person who can generate a higher dollar amount of market-beating returns to be "more skilled". Given this criterion, is manager A more or less skilled than manager B?
   2.  2) Suppose investors chase after funds with positive post-fee returns by giving them more money to manage until post-fee returns become zero, as Berk-and-Green theory predicts. How much more investment will flow into funds A and B, respectively?

For instance, some manager C might be able to outperform the market by $10 million. Then, if she manages a fund with $100 million AUM, her pre-fee return will be 10/100 = 10%. If she manages a fund with $200 million AUM, her pre-fee return will be 10/200 = 5%.?

Answer rating: 100% (QA)

Answer 1 In order to determine who is more skilled between manager A and manager B we must compare t... View the full answer