A Study of Trading Behavior of Individual Investors at a Discount

question 6

Multiple Choice

A study of trading behavior of individual investors at a discount brokerage found that individual investors ________.

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

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Definitions:

Salaries Payable

The liability account that contains the amounts of any salaries owed to employees, which have not yet been paid.

Supplies Account

An account used to track the costs of small items or materials that are used in the operations of a business.

Adjusting Journal Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period, ensuring the financial statements reflect accurate and up-to-date information.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired.