Page 82 - FINAL CFA I SLIDES JUNE 2019 DAY 3

LOS 11.k: Describe the issues regarding selection
of the appropriate sample size (data-mining bias, Session Unit 2:
sample selection bias, survivorship bias, look- 8. Statistical Concepts and Market Returns
ahead bias, and time-period bias) p.262

Increasing the sample size will generally improve parameter estimates and narrow CI (unless larger samples instead contain
observations from different population distributions) .

The cost of more data must be weighed against these benefits, and adding data that is not generated by the same distribution will
not necessarily improve accuracy or narrow CIs.

Potential mistakes/biases:

Data mining -significant relationships that have occurred by chance;

Sample selection bias -selection is non-random;

Look-ahead bias -basing the test at a point in time on data not available at that time
;
Survivorship bias -using only surviving mutual funds, hedge funds, etc.); and

Time-period bias -the relation does not hold over other time periods.