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Quantitative Methods
Quantitative Methods
Medium
Oakridge Analytics backtests a momentum strategy using a hedge fund database that only includes funds currently in operation. The backtest shows an annualized return of 12.4%. The most likely bias affecting these results is:
A
Survivorship bias, which overstates historical returns by excluding defunct funds.
B
Look-ahead bias, which uses information unavailable at the time of the investment decision.
C
Time-period bias, which draws conclusions from an unrepresentative sample period.
D
Data-snooping bias, which results from excessive testing of strategies on the same dataset.
Select an answer to continue
Tags
#survivorship-bias
#sampling-bias
#backtesting
#hedge-funds
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