Which of the Following Best Defines Behavioral Finance

question 9

Multiple Choice

Which of the following best defines behavioral finance?

• A)The study of human makeup and actions that explain logical economic and financial behavior
• B)The study of human makeup and actions that result in deviations from logical economic and financial behavior
• C)The study of market actions that explain logical economic and financial behavior
• D)Both b and c
• E)None of the above

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Definitions:

Negative Externality

A cost that is suffered by a third party due to an economic transaction that they were not involved in.

Well-Being

The state of being comfortable, healthy, or happy, reflecting the overall quality of a person's life.

Compensation

The total amount of the monetary and non-monetary pay provided to an employee by an employer in return for work performed as required.

Market Equilibrium

A situation in which the quantity of a product demanded by consumers equals the quantity supplied by producers, leading to a stable price.