The Most Important Difference Between the 'Cognitive Miser' Model and the 'Motivated

question 56

Multiple Choice

The most important difference between the 'cognitive miser' model and the 'motivated tactician' model is:

• A) the role of thought.
• B) the role of motivation.
• C) the role of behaviour.
• D) the role of structure.

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Definitions:

Four-factor Model

A financial model that expands the three-factor model (market risk, size risk, and value risk) by adding a momentum factor to explain stock returns.

Fama and French Factors

Fama and French factors are three factors—market risk, size risk, and value risk—used in explaining portfolio returns beyond the market risk measured by beta.

Semistrong-form

A theory suggesting that stock prices incorporate all publicly available information, including historical data and public news.

Efficient Market Hypothesis

A theory stating that share prices reflect all available information, making it impossible to consistently achieve higher returns.