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Suppose money manager A has earned an average return of 12% over the past 5 years, while manager B has earned 8% over that span.

Suppose money manager A has earned an average return of 12% over the past 5 years, while manager B has earned 8% over that span. The S&P 500 has returned 10% over the same period. There are 3 possibilities: 1) manager A outperformed manager B; 2) Manager B outperformed manager A; and 3) they performed equally well. Explain how each scenario could be true.

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