Which of the following tendencies of individual investors is called the disposit

Q: Which of the following tendencies of individual investors is called the disposit

Ans) D. The tendency to hold on to stocks that have lost value and sell stocks that have risen in value since the time of purchase. The disposition effect is an anomaly discovered in behavioral finance. It relates to the tendency of investors to sell shares whose price has increased, while keeping assets that have dropped in value.

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Question

Which of the following tendencies of individual investors is called the disposition effect?

A. The tendency to trade too much based on the mistaken belief that they can pick winners and losers better than investment professionals.

B. The tendency to buy stocks that have been in the news, advertised more, have very high trading volume, or recently had extreme (high or low) returns.

C. The tendency to put too much weioght on their own experience rather than considering historical evidence.

D. The tendency to hold on to stocks that have lost value and sell stocks that have risen in value since the time of purchase.

Explanation / Answer

Ans) D. The tendency to hold on to stocks that have lost value and sell stocks that have risen in value since the time of purchase.

The disposition effect is an anomaly discovered in behavioral finance. It relates to the tendency of investors to sell shares whose price has increased, while keeping assets that have dropped in value.

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Which of the following tendencies of individual investors is called the disposit

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Which of the following tendencies of individual investors is called the disposit

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