Disposition Effect Is the Tendency of Individual Investors to ________

question 45

Multiple Choice

Disposition effect is the tendency of individual investors to ________.

• A) trade too much based on the mistaken belief that they can pick winners and losers better than investment professionals
• B) buy stocks that have been in the news, advertised more, have very high trading volume, or recently had extreme (high or low) returns
• C) put too much weight on their own experience rather than considering historical evidence
• D) hold on to stocks that have lost value and sell stocks that have risen in value since the time of purchase

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Definitions:

Mutual Misunderstanding

Mutual misunderstanding occurs when two or more parties have differing interpretations or perceptions about an agreement or situation.

Meeting of the Minds

A mutual agreement or consent among parties in a contract, indicated by a clear understanding and acceptance of essential terms and conditions.

Contract

A legally-binding agreement between two or more parties that outlines obligations and privileges.

Organizational Behavior

The study of how people interact within groups, particularly in a work context, including patterns of behavior and underlying psychological mechanisms.