Investors That Suffer from a Familiarity Bias

question 68

Multiple Choice

Investors that suffer from a familiarity bias:

• A)prefer not to invest in companies they are familiar with.
• B)favor investments in companies they are familiar with.
• C)invest in the same stocks that their friends or family recommend.
• D)tend to overestimate the precision of their knowledge.

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Definitions:

Psychoanalysis

A therapeutic approach founded by Sigmund Freud that explores unconscious motives and conflicts as they influence personality and behavior.

Systematic Fashion

Refers to doing things in a methodical, organized way, typically to achieve efficiency and to ensure that no steps are missed.

Sample Size

The number of individuals or observations included in a study, which can affect the reliability and validity of the research findings.

Temper Tantrums

Emotional outbursts, often observed in children, that are characterized by yelling, crying, and aggressive or defiant behavior.