Suppose there are 4096 actively-managed mutual funds, Ask an Expert

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Suppose there are 4096 actively-managed mutual funds. Suppose also that the markets are perfectly efficient, so it is not possible to beat the market by 'skill', only by luck.

Let's say that a fund has a 50/50 chance of beating its benchmark index every year. How many funds would you expect to beat the index every year for the past 10 years straight?

Bonus question: if you invest your money into one of these funds that beat the benchmark every year for 10 years, what is your chance of beating the benchmark next year?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92742626

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