Which of the Following Describes the Tendency for Potential Losses

question 25

Multiple Choice

Which of the following describes the tendency for potential losses to be more psychologically influential that potential gains

• A) loss aversion
• B) prospect theory
• C) bounded rationality
• D) rational economic thinking

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Definitions:

Portfolio

A collection of investments held by an individual or institution, which may include stocks, bonds, real estate, and other financial assets.

Indifference Curves

Graphical representations in economics showing different bundles of goods between which a consumer is indifferent, reflecting preferences of equal utility.

Budget Line

A graphical representation of all possible combinations of two goods that an individual can afford to purchase with a given budget, at given prices.

Risk Averse

Describes individuals or entities that prefer to avoid risk, often opting for safer investments even with potentially lower returns.