A Study of Trading Behaviour of Individual Investors at a Discount

question 6

Multiple Choice

A study of trading behaviour of individual investors at a discount brokerage found that individual investors

• A)trade very actively, partly because their performance is better than the professionals' due to low trading costs.
• B)trade very conservatively, partly because their performance is better than the professionals' due to low trading costs.
• C)trade very conservatively, despite the fact that their performance is actually worse because of trading costs.
• D)trade very actively, despite the fact that their performance is actually worse because of trading costs.

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Definitions:

Holder in Due Course

A party in possession of a negotiable instrument, such as a check or promissory note, acquired in good faith and thus protected against many defenses.

Negotiable Instrument

An official document certifying the payment of a particular sum of cash, either to be paid on demand or at an agreed-upon time, with the payer's name mentioned in the document.

Good Faith

The honest intention to act without taking an unfair advantage over another party, typically implied in agreements and transactions to ensure fairness and integrity.

Defects

Imperfections or faults in a product or structure that may affect its usability, safety, or function.