Which of the Following Is an Insight from Behavioral Finance

question 4

Multiple Choice

Which of the following is an insight from behavioral finance?

• A) The price of securities fully reflects all available information.
• B) Investor overconfidence leads to high trading volumes.
• C) The optimal forecast of a security's return equals the security's equilibrium return.
• D) Investment advisers cannot consistently beat the market.

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Definitions:

Variable Costing Income (VCI)

An accounting method that includes only variable costs—costs that change with production level—in calculating net income.

Full Costing Income (FCI)

A method of accounting that allocates all fixed and variable costs to products, operations or projects to determine profitability.

Consolidated Accounts

Financial statements that represent the combined financial activities of a parent company and its subsidiaries.

Absorption Costing

A costing approach that encompasses all costs associated with production, namely direct materials, direct labor, and both variable and fixed overheads, in the product's final cost.