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Reading 52 The Behavioral Biases of Individuals

The document contains 8 multiple choice questions related to behavioral finance concepts like biases, heuristics, and cognitive errors. The questions cover topics such as anchoring bias, loss aversion, representativeness bias, overconfidence, and availability bias.

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Prasad Aurangabadkar
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164 views3 pages

Reading 52 The Behavioral Biases of Individuals

The document contains 8 multiple choice questions related to behavioral finance concepts like biases, heuristics, and cognitive errors. The questions cover topics such as anchoring bias, loss aversion, representativeness bias, overconfidence, and availability bias.

Uploaded by

Prasad Aurangabadkar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Question #1 of 8 Question ID: 1379951

With respect to asset "bubbles":

anchoring may cause investors to mitigate bubbles by reducing their market


A)
exposure.

B) behavioral finance provides an overall explanation.

C) hindsight bias can fuel overconfidence.

Question #2 of 8 Question ID: 1380846

Which of the following behavioral biases is most likely related to information processing?

A) Status quo.

B) Anchoring and adjustment.

C) Loss aversion.

Question #3 of 8 Question ID: 1380844

Which of the following are considered biases due to cognitive errors?

A) Conservatism, hindsight, and framing biases.

B) Loss aversion, self-control, and regret-aversion biases.

C) Representativeness, mental accounting, and overconfidence biases.

Question #4 of 8 Question ID: 1379950

Evidence that investors hold portfolios that are less diversified than traditional finance

would suggest may be best explained by:

A) fear of regret.
B) overconfidence.

C) anchoring.

Question #5 of 8 Question ID: 1380843

Which of the following cognitive errors are best described as belief persistence biases?

A) Mental accounting, framing, and availability biases.

B) Illusion of control, confirmation, and anchoring and adjustment biases.

C) Conservatism, representativeness, and hindsight biases.

Question #6 of 8 Question ID: 1380842

Which of the following statements would most likely be classified as a cognitive error? The
investor:

A) tends to take more risk rather than sell a stock at a loss.

B) acts defensively when asked why he made a poor investment decision.

C) has a tendency to place information into categories.

Question #7 of 8 Question ID: 1380845

Which of the following are considered emotional biases?

A) Status quo and endowment biases.

B) Confirmation, control, and availability biases.

C) Anchoring and adjustment bias.

Question #8 of 8 Question ID: 1380847


Which of the following statements best describes the availability bias? An investor:

A) bases a decision on how the information is presented.

B) associates new information with an easily recalled past event.

C) only notices information that agrees with their perceptions or beliefs.

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