Tina Has Been Trying to Sell Some of Her Things

question 173

Multiple Choice

Tina has been trying to sell some of her things on e-bay recently, but nothing seems to sell. She listed an old Ouija board for $20, a pair of used tights for $25, and an old (partially working) smoke detector for $60. A friend suggested that she lower her prices, but Tina maintains that these items are really worth a lot. Tina is showing a severe case of ____.

• A) the endowment effect
• B) self-handicapping
• C) automatic egotism
• D) the over-justification effect

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Definitions:

EMH

Efficient Market Hypothesis, the theory that all known information is reflected in stock prices and that it is impossible to consistently outperform the market through expert stock selection or market timing.

Law Of One Price

The rule stipulating that equivalent securities or bundles of securities must sell at equal prices to preclude arbitrage opportunities.

Relative Strength

The extent to which a security has outperformed or underperformed either the market as a whole or its particular industry.

Outperformed

Describes when an investment or fund earns a return that exceeds the performance of its benchmark or peer group.