An Equity Analyst Working for a Growth Oriented Mutual Fund

question 347

Multiple Choice

An equity analyst working for a growth oriented mutual fund has a tendency to misvalue the stocks of popular companies that she has previously recommended and the fund already owns. Her behavior is most likely consistent with which of the following biases?

• A) Escalation bias
• B) Prospect theory
• C) Confirmation bias
• D) Probability bias

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Definitions:

Justify Actions

The process of providing reasons or explanations for one's behavior in a manner that depicts it as reasonable or necessary.

Emotional Infidelity

Forming a deep emotional connection with someone other than one's partner, which can threaten the primary relationship.

Sexual Infidelity

Engaging in sexual activity with someone other than one's spouse or partner, thus violating the norms or agreements of the relationship.

Arranged Marriages

Marriages in which the spouses are chosen by parents, family members, or matchmakers rather than by each other.