When Investment Banks Buy or Sell Securities on Their Own

question 50

Multiple Choice

When investment banks buy or sell securities on their own account,it's called

• A) financial engineering.
• B) proprietary trading.
• C) underwriting.
• D) factoring.

---

Definitions:

Hindsight Bias

The inclination to think, upon discovering a result, that it was predictable in hindsight, referred to as the "knew-it-all-along" effect.

Psychological Theories

Frameworks for understanding mental processes and behavior through systematized concepts and propositions.

Common Sense

Practical judgment concerning everyday matters, or a basic ability to perceive, understand, and judge that is shared by ("common to") nearly all people.

Overconfidence

The condition of having excessive confidence or belief in one's own abilities, often more than is objectively warranted.