Suppose you observe the investment performance of 800


Suppose you observe the investment performance of 800 portfolio managers and rank them by investment returns during the year. Sixteen percent of all managers are truly skilled, and therefore always fall in the top half, but the others fall in the top half purely because of good luck. What fraction of this year's top-half managers would you expect to be top-half performers next year?

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Finance Basics: Suppose you observe the investment performance of 800
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