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:

Historically Unpopular

Refers to being widely disliked or not favored by many throughout history.

Syllabus

An academic document that outlines the structure, content, rules, and objectives of a specific course, including reading lists and assessment methods.

Channel of Communication

The medium through which a message is transmitted from sender to receiver.

Collectivist Societies

Societies that prioritize the needs and goals of the group over the individual.