1 answer

In a perfectly efficient market, an active strategy mutual fund that charges a 1% fee has...

Question:

In a perfectly efficient market, an active strategy mutual fund that charges a 1% fee has about a 47% chance of beating the i

In a perfectly efficient market, an active strategy mutual fund that charges a 1% fee has about a 47% chance of beating the index net of fee. In a universe of 5,000 funds, how many funds would you expect to beat the index all but once out of the past 9 years? In other words, the fund would fail to beat the benchmark in one of the 9 years Enter answer accurate to two decimal places

Answers

Probability at bund beating the Index = 0.47 Probability for tailure = 1-0.47 = 0.53 Failure it bund is once out of 9 years P

The fund would fail to beat the benchmark in one out of 9 years = 56.7895

.

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