Explain Why the Market Portfolio Proxy May Not Be Efficient

question 43

Essay

Explain why the market portfolio proxy may not be efficient.

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Definitions:

Operant Conditioning

A behavioral modification approach where the vigor of an activity is changed by applying reinforcements or punishments.

Social Learning Theory

A theory that proposes people can learn new behaviors and norms through observational learning, by watching and imitating others.

Classical Conditioning

An educational method where two signals are frequently combined, leading to a response initially triggered by the second signal being provoked by just the first signal over time.

Psychoanalytic

A therapeutic approach and theory of psychology that emphasizes unconscious mental processes and childhood experiences in shaping behavior and personality.