When Investors Invest in Something Simply Because Everyone Else Is

question 86

Multiple Choice

When investors invest in something simply because everyone else is doing it, they are:

• A) following their "rational intuition."
• B) following a "herd instinct."
• C) supporting the efficient market hypothesis.
• D) conducting performance analysis.

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Definitions:

Normal Distribution

A bell-shaped data distribution where most observations cluster around the central peak and the probabilities for values further away from the mean taper off equally in both directions.

Sample Proportion

The fraction or percentage of a sample that exhibits a particular trait or attribute.

Population Proportion

The percentage of individuals in a population who share a certain characteristic or attribute.

Expected Value

The expected value of a random variable is the long-run average value of repetitions of the experiment it represents.