______ bias arises when the returns of unsuccessful funds are left out of the sample.

Question

Quizplus · Accepted Answer

Survivorship bias occurs when the sample of data used in an analysis only includes successful funds that are still in operation, while unsuccessful funds that have been shut down or merged are excluded. This can create an overly optimistic view of the performance of the fund industry as a whole, as the underperforming funds that are excluded would drag down the average returns. Therefore, Survivorship bias arises when the returns of unsuccessful funds are left out of the sample.

______ Bias Arises When the Returns of Unsuccessful Funds Are