Thoughts this was a good one… Suppose that a portfolio management firm has abnormally high turnover in their staff. Which of the following is the most likely scenario? A) The firm’s Type I error rate is high and their Type II error rate is high. B) The firm’s Type I error rate is low and their Type II error rate is low. C) The firm’s Type I error rate is high and their Type II error rate is low. D) The firm’s Type I error rate is low and their Type II error rate is high. Your answer: D was correct! Type I error is retaining a poor manager and Type II error is firing a superior manager. If a firm has high turnover in staff, it is unlikely they are retaining poor managers but more likely that they are firing good managers.