An analyst wants to estimate the historical equity market return of the developed Europe market....
90.2K
Verified Solution
Link Copied!
Question
Finance
An analyst wants to estimate the historical equity market return of the developed Europe market. He downloaded the portfolio holdings of a European market ETF at the end of 2019 and use the weighted average historical returns of those stocks to estimate the market return over a 20-year period (while the ETF only goes back for 10 years). The potential issues of this exercise include: a. A survivorship blas as those companies in the ETF in 2019 would be the ones that have historically performed well b. All of the options c. A look-ahead bias as we would have not known the stocks that are large enough to be included in the ETF before 2019 d. A look-ahead bias as the weight used in the calculation is determined at the end of 2019 and would not have been known to investors historically
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
