According to the Theory of Recency Bias, Investors Tend to Believe

question 56

Multiple Choice

According to the theory of recency bias, investors tend to believe the financial markets will:

• A)gravitate to their long-term average rates of return.
• B)react over the next year in direct opposition to the performance of the prior year.
• C)have a maximum of three years of positive annual returns before declining somewhat.
• D)continue to perform as they have over the past couple of years.
• E)tend to reverse direction at least every five years.

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Definitions:

Individual Differences

Variations among individuals in their psychological traits, behaviors, and physiological responses.

Epigenetic Marks

Chemical modifications to DNA and histone proteins that regulate gene activity without altering the DNA sequence, affecting how cells read genes.

Behavior Geneticists

Scientists who study the role of genetic and environmental influences on behavior.

Reproductive Capacities

The biological capability of individuals or species to produce offspring, involving various physiological and genetic factors.