____________ May Be Responsible for the Prevalence of Active Versus

question 21

Multiple Choice

____________ may be responsible for the prevalence of active versus passive investments management.

• A) Forecasting errors
• B) Overconfidence
• C) Mental accounting
• D) Conservatism
• E) Regret avoidance

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Definitions:

Regressive Tax

A tax applied uniformly, taking a larger percentage of income from low-income earners than from high-income earners, considered to be inversely proportional to the taxpayer's ability to pay.

Average Tax Rate

The proportion of total income that an individual or business pays in taxes, calculated by dividing the total tax paid by the taxable income.

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, usually aimed at ensuring fairness by taxing higher incomes at higher rates.

Average Tax Rate

The fraction of total income that is paid in taxes, calculated by dividing the total tax amount by the total income.