Lily Wants to Invest in the Stock Market

question 18

Multiple Choice

Lily wants to invest in the stock market.She notices that the share price for Great Flowers Inc.has been rising for weeks.She chooses to invest in Great Flowers Inc.because she assumes it will continue to rise purely because of the run it has been on.Lily suffers from:

• A) the hot-hand fallacy.
• B) the gambler's fallacy.
• C) a present bias.
• D) the sunk cost fallacy.

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Definitions:

Payments

Transactions by which goods, services, or obligations are paid for through the transfer of money or its equivalents.

Compounded Monthly

A method where interest earned is added to the principal monthly, so that each subsequent interest calculation is made on a larger amount.

Retirement Savings Plan

A financial arrangement designed to help individuals save for their retirement, offering various tax advantages.

Contributions

Payments or deposits made into a particular fund or account for the purposes of investment or savings growth.