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Iteru [2.4K]
3 years ago
5

An online investment blogger advises investing in mutual funds that have performed badly the past year because 'regression to th

e mean tells us that they will do well next year.'
Is he correct?
Business
1 answer:
Kipish [7]3 years ago
7 0

Answer:

The correct answer is: No, he is not correct.

Explanation:

Regression to the mean is a statistical phrase that tries to explains that is something happened at the first attempt, it is likely to happen again at a second attempt and if it happens at the second attempt it is because it almost happened at the first attempt.

Then, following the concept of regression to the mean,<em> if a mutual fund performed badly on the last period, it is likely to perform even worse in the current period</em>. Thus, the online investment blogger is wrong.

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Answer:

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Q 10.25: Admire County Bank agrees to lend Givens Brick Company $600,000 on January 1st. Givens Brick Company signs a $600,000,
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Entry is given below

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Entry                      DEBIT          CREDIT

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Interest                 $36,000(w)

Cash                                           $636,000

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