Because They Are So Sure of Their Ability to Pick

question 84

Multiple Choice

Because they are so sure of their ability to pick winners, some people hang on to a stock even in the face of overwhelming evidence that its price is going to drop. These people are subject to

• A) a framing bias.
• B) overconfidence.
• C) a sunk cost fallacy.
• D) overvaluing the present relative to the future.

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Definitions:

Registration Statement

A set of documents, including a prospectus, filed with the Securities and Exchange Commission (SEC) that discloses important information regarding a company's securities offering.

Prospectus

An official document that companies issue to potential investors, detailing the financial security they are offering.

Securities And Exchange Commission

The U.S. government agency responsible for regulating the securities markets and protecting investors.

Accredited Investor

A private investor who is allowed to accept private securities offerings under certain specific guidelines the SEC sets.