Question

J. M. Keyes put all his money in on tock, and the stock doubled in value in a matter of months. He did this three times in a row with three different stocks. J. M. got his picture on the front page of the Wall Street Journal. However, the paper never mentioned the thousands of investors who made similar bets on other stocks and lost most of their money. This is an example of the _____problem in deciding how efficient the markets are.
a. Magnitude
b. Selection bias
c. Lucky event
d. Small firm

Answer 1

Answer:

c.Lucky event.

Explanation:

This an example of lucky event problem.

Since for every one successful manager, there are many managers who lost, who are not brought into lime light.

Magnitude problem means only managers with high amount of investments will show considerable profits.

Selection bias means only those with portfolios which generate profits are published.