Our Impression of How We Acted or Would Have Acted

question 10

Multiple Choice

Our impression of how we acted or would have acted changes when we learn the outcome of an event.What term refers to this phenomenon?

• A) halo bias
• B) bounded rationality
• C) satisficing
• D) hindsight bias

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Definitions:

SMB Beta

A measure used in the evaluation of stocks, indicating a stock's sensitivity to movements in the small minus big (SMB) factor, part of the Fama-French three-factor model.

HML Beta

A measure of sensitivity to the HML (High Minus Low) factor, part of the Fama-French three-factor model, indicating how much a stock's return is affected by the value premium.

Risk Premium

The additional return expected on an investment for taking on higher risk compared to a risk-free asset.

SMB Beta

A measure used in financial models to estimate the sensitivity of a stock’s return relative to the return of a small-minus-big (SMB) factor, part of the Fama-French three-factor model.