Behavioural Finance Suggests That Investors React to New Information in an Efficient

question 12

True/False

Behavioural finance suggests that investors react to new information in an efficient manner such that security prices accurately reflect the new information.

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Definitions:

Escalation of Commitment

The phenomenon where individuals or organizations continue to invest in a decision despite evidence of its ineffectiveness, often to justify previous investments.

Dollar Cost Averaging

An investment strategy that involves regularly investing a fixed amount of money, regardless of the share price, to reduce the impact of volatility.

Framing Error

A cognitive bias involving the presentation or "framing" of information in a way that influences decision making or perception.

Satisficing

The process of choosing an adequate solution that meets minimum criteria, often used in decision-making when an optimal solution is unfeasible.