What possibilities exist to explain the claim made by many professional portfolio managers that they can exceed the average stock market return year after year?
What will be an ideal response?
As the chapter points out there are four possibilities; 1) the managers have private or insider information, which is illegal; 2) They are lucky; 3) They are taking on more risk which will provide a higher return in some years but can also lead to lower than average returns for other years; and 4) markets are not efficient.
You might also like to view...
Approximately, the real interest rate ________ the inflation rate ________ the nominal interest rate
A) plus; equals B) equals; plus C) equals; minus D) minus; equals
When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market
a. It is appropriate to ignore that the market price includes a margin above marginal cost b. It is OK if the product on the market includes costly features your downstream division does not use c. it is OK if the product on the market is inexpensive because its quality is lower than you use d. if it is similar enough, it calls into question whether there are gains from producing it in-house