Kevin Just Read an Authoritative Study That Shows That a Stock's

question 92

Multiple Choice

Kevin just read an authoritative study that shows that a stock's current price on the stock market is completely unrelated to its previous price. In other words, if a stock does well one week, it may or may not do well the next week. However, Kevin still only wants to sell stocks of his whose price increased over the last several weeks because he thinks they are more likely to reverse themselves the next week. Kevin is guilty of

• A)the gambler's fallacy.
• B)unrealistic confidence.
• C)the anchoring heuristic.
• D)the availability heuristic.

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Definitions:

SAT scores

Standardized test scores used for college admissions in the United States, assessing a student's readiness for college.

Standard deviation

A measure that quantifies the amount of variation or dispersion of a set of data values.

Population standard deviation

A measure of the dispersion of a set of data from its mean, calculated for the entire population.

Confidence interval

A range of values, derived from the sample statistics, that is likely to contain the value of an unknown population parameter.