Equity - EOC Questions - Page 149

For Q7. Can any one explain how the backfilling the index returns using companies that survived to the index construction is expected to be a positive bias? This looks simple but could not get my mind around it. If we pick good stocks using survivorship bias, shouldn’t the equity risk premium be lower? Is that what the question means positive bias?

historical return on the stocks that survive will be higher (also above risk-free rate)