Consider the Following Two Statements: (I) the Representativeness Principle Results

question 2

Multiple Choice

Consider the following two statements: (i) The representativeness principle results in an under reaction in share markets.
(ii) The conservatism principle can explain why share prices underreact to new information as long
As there are enough conservative investors.

• A)(i) is correct, (ii) is incorrect.
• B)(ii) is correct, (i) is incorrect.
• C)Both (i) and (ii) are correct.
• D)Both (i) and (ii) are incorrect.
• E)Representativeness refers to the tendency for individual stocks to follow the market.

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Definitions:

Cash Receipts

Cash receipts are the total amount of money, including cash and checks, received by a business during a specific period for goods or services provided.