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What is Survivorship Bias?

Survivorship Bias A statistical distortion that arises when only surviving entities are included in performance analysis, causing overestimation of average returns or underestimation of risk in portfolios.

Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework

How is “Survivorship Bias” Used in Practice?

Ignoring defunct funds in a performance study introduces survivorship bias and may mislead investors about historical returns.

Certification Exam Relevance

CFAACCAFRM

Who Needs to Know This Term?

  • Financial Analysts
  • Bankers
  • Traders

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Frequently Asked Questions

What is Survivorship Bias?

A statistical distortion that arises when only surviving entities are included in performance analysis, causing overestimation of average returns or underestimation of risk in portfolios.

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