The Increased Cash Flows into Mutual Funds That Have Recently

question 57

Multiple Choice

The increased cash flows into mutual funds that have recently had superior returns is most associated with which one of the following characteristics?

• A)overconfidence
• B)excess trading
• C)clustering illusion
• D)diversification
• E)risk aversion

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Definitions:

Interest Rate Effect

The interest rate effect describes how changes in the central bank's interest rate influence the economy by affecting consumer spending and investment.

Entropy Effect

In thermodynamics, it refers to the measure of disorder or randomness in a system; metaphorically used in various fields to describe chaos or decline.

Classical Economists

Economists from the 18th and 19th centuries who believed in free markets, limited government intervention, and self-regulating economies.

Market Forces

The economic factors affecting the price, demand, and availability of goods and services in a market economy, primarily supply and demand.