The Most Important Lesson Investors Can Learn from Behavioral Finance

question 29

Multiple Choice

The most important lesson investors can learn from behavioral finance is

• A) to understand psychological factors influencing long-term price movement.
• B) to have the humility to let professionals manage their investments.
• C) how to avoid letting their emotions and biases affect their investment decisions.
• D) to have confidence in their instincts and first impressions.

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Definitions:

Longitudinal

A study design that follows the same subjects over a period of time to observe changes or developments.

Sequential

Pertaining to or following a logical order or a sequence where one thing comes after another in a specified order.

Cross-Sectional

A type of observational study that analyzes data collected from a population, or a representative subset, at a specific point in time.

Cognitive Skills

Mental abilities involved in processing information, understanding concepts, and solving problems through logical reasoning and thought.