An investor bought shares in the five firms whose stocks were the five best Dow Jones companies in the first quarter of the year. In the second quarter, however, the performance of these five firms was rather ordinary. The statistical phenomenon taking place here is A. The law of averages says that these stocks must perform at the market average over the long haul. B. The Central Limit theorem says that distributions tend to normal, so that the abnormal results of the previous quarter are difficult to repeat. C. Statistical independence indicates that performance in the first quarter cannot be used to predict performance in the second quarter. D. The regression effect says that high performances tend to return to average.

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An investor bought shares in the five firms
whose stocks were the five best Dow Jones
companies in the first quarter of the year. In
the second quarter, however, the
performance of these five firms was rather
ordinary. The statistical phenomenon taking
place here is
A. The law of averages says that these stocks
must perform at the market average over the
long haul.
B. The Central Limit theorem says that
distributions tend to normal, so that the
abnormal results of the previous quarter are
difficult to repeat.
C. Statistical independence indicates that
performance in the first quarter cannot be
used to predict performance in the second
quarter.
D. The regression effect says that high
performances tend to return to average.
Transcribed Image Text:An investor bought shares in the five firms whose stocks were the five best Dow Jones companies in the first quarter of the year. In the second quarter, however, the performance of these five firms was rather ordinary. The statistical phenomenon taking place here is A. The law of averages says that these stocks must perform at the market average over the long haul. B. The Central Limit theorem says that distributions tend to normal, so that the abnormal results of the previous quarter are difficult to repeat. C. Statistical independence indicates that performance in the first quarter cannot be used to predict performance in the second quarter. D. The regression effect says that high performances tend to return to average.
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