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If a Portfolio Manager Had to Estimate the Fair Value

question 57

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If a portfolio manager had to estimate the fair value of illiquid mortgage-backed securities,which of the following would he/she most likely identify as the level of inputs to determine this?


Definitions:

Representativeness Heuristic

A cognitive shortcut that involves making judgments based on how well something matches or represents a particular prototype.

Overconfidence

The tendency to be more confident in one's own abilities or outcomes than is objectively justified.

Availability Heuristic

A mental shortcut that relies on immediate examples that come to a person’s mind when evaluating a specific topic, concept, method, or decision.

Representativeness Heuristic

A cognitive shortcut used in decision-making that involves judging the likelihood of an event based on how closely it matches a prototype or stereotype.

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