James Has Just Purchased a Stock for $50 a Share

question 92

Multiple Choice

James has just purchased a stock for $50 a share, and in the first two days it rises to $60 a share. James decides that this 20% gain in 48 hours is a nice little windfall, and sells the stocks at that price. The fact that it next goes up to $80 a share in the following month leaves James wondering why he sold. This tendency to sell a stock too quickly after its value has increased is called the ____ effect.

• A) endowment
• B) disposition
• C) Escalation
• D) sunk cost

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Definitions:

Dependent Means

Dependent means refer to statistical analyses concerning means from related or paired samples, where the observation in one sample is influenced by or paired with the other.

Sample

A subset of a population. See Population.

Obtained Value

The specific result or number arrived at after conducting an experiment or calculation.

Critical Value

A point on the scale of the test statistic beyond which the hypothesis is rejected.