Even though indexing is growing in popularity, only about ________ of equity in the mutual fund industry is held in indexed funds. This may be a sign that investors and managers ________.
A) 5%; are excessively conservative
B) 25%; overestimate their ability
C) 15%; suffer from framing biases
D) 25%; engage in mental accounting

Question

Quizplus · Accepted Answer

The statement suggests that indexing is growing in popularity but only a small proportion of equity in the mutual fund industry is held in indexed funds. This may indicate that investors and managers overestimate their ability to outperform the market through active management, which is consistent with Choice B. Choices A, C, and D are not supported by the information given in the statement.

Even Though Indexing Is Growing in Popularity, Only About ________