Hedge funds report average returns in December that are higher than their average returns in other months.This phenomenon __________.
I.is called the Santa effect
II.often results from over generous valuation of illiquid assets
III.appears stronger for lower-liquidity funds
IV.can be explained by managers' attempts to inflate assets to collect higher performance bonuses

Question

Quizplus · Accepted Answer

This phenomenon is known as the Santa effect and can be attributed to overvaluation of illiquid assets, is more pronounced in lower-liquidity funds, and may be driven by managers inflating asset values to earn higher bonuses.

Hedge Funds Report Average Returns in December That Are Higher