Four of the Last Five Stocks Your Investment Adviser Recommended

question 28

Multiple Choice

Four of the last five stocks your investment adviser recommended have outperformed the market.Thus,you believe that if you continue to follow her advice,that 80 percent of your investments will outperform the market over the long term.This belief is based on the:

• A) gambler's fallacy.
• B) law of small numbers.
• C) law of large numbers.
• D) clustering illusion.
• E) positive performance illusion.

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Definitions:

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is a critical factor in decision-making for firms in competitive markets.

Total Revenue

The overall amount of money generated by a company from its business activities, usually from the sale of goods or services, before any costs or expenses are deducted.

Output Rising

A situation where the production of goods and services in an economy increases over a certain period.

Optimal Efficiency

The most advantageous level of efficiency where resources are utilized in a way that maximizes output or benefits without waste.