According to the Theory of Recency Bias, Investors Tend to Believe

question 56

Multiple Choice

According to the theory of recency bias, investors tend to believe the financial markets will:

• A)gravitate to their long-term average rates of return.
• B)react over the next year in direct opposition to the performance of the prior year.
• C)have a maximum of three years of positive annual returns before declining somewhat.
• D)continue to perform as they have over the past couple of years.
• E)tend to reverse direction at least every five years.

Evaluate investments using various financial evaluation methods such as break-even time (BET), accounting rate of return, and consideration of cash flows.

Understand the role of risk and rate of return in business decision-making.

Understand the concept and application of you-attitude in communication.

Identify strategies for conveying information tactfully and positively.

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Definitions:

Sexual Identity

How one thinks of oneself in terms of to whom one is romantically or sexually attracted.

Gender

The range of characteristics pertaining to, and differentiating between, masculinity and femininity, often based on social and cultural meanings.

Sex

The biological categorization of organisms as male or female, often based on reproductive functions, and human sexual activity and interaction.

Self-fulfilling Prophecy

A belief or expectation that an individual holds about a future event that manifests because the individual holds it.