Which of the Following Is a Fundamental Principle of Behavioral

question 26

Multiple Choice

Which of the following is a fundamental principle of behavioral finance?

• A)the use of P/E ratios
• B)the tendency to avoid acknowledging investment errors
• C)selling stocks at a loss for tax purposes
• D)constructing a diversified portfolio

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Definitions:

Duty of Cooperation

An obligation between parties in a contract to act in good faith and assist each other in fulfilling the contract's terms.

Breach of Duty

Failure to fulfill a legal obligation or duty, leading potentially to legal liability.

Exclusive Agreement

A contract between two or more parties where one party agrees to buy, sell, or promote only the products or services of the other party.

Reasonable Efforts

A legal standard that requires a party to act with fair, honest, and diligent efforts to fulfill an obligation.