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

question 39

Multiple Choice

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

• A) revolve around their long-term average performance.
• B) react over the next year in direct opposition to the performance of the prior year.
• C) have a maximum of 4 years of positive annual returns.
• D) continue to perform as they have over the past couple of years.
• E) have an average return for the next 3 years that equals the average return for the past 30 years.

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