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Mutual funds are one of the most important financial institutions in the market. However, it is unclear whether the average mutual fund has skill. When

Mutual funds are one of the most important financial institutions in the market. However, it is unclear whether the average mutual fund has skill. When designing a benchmark to compare with the average mutual fund, we should consider... (choose one)

- Market frictions such as transaction costs and shortselling constraints.

- Nothing.

- The best performing benchmark investment strategy we can theoretically design.

- The best performing mutual funds.

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