Suppose an Investor Can Earn a Steady 5% Annually with Investment

question 68

True/False

Suppose an investor can earn a steady 5% annually with investment A,while investment B will yield a constant 12% annually.Within 11 years' time,the compounded value of investment B will be more than twice the compounded value of investment A (ignore risk).

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Definitions:

Status Quo Bias

A cognitive bias that leads individuals to prefer things to remain the same or maintain their current state over pursuing change.

Status Quo Bias

The preference for maintaining current conditions or resisting change, even when better alternatives exist.

Anchoring Effect

A cognitive bias where an individual depends too heavily on an initial piece of information (the "anchor") when making decisions.

Endowment Effect

A psychological inclination to value possessions more highly solely due to personal ownership.