Escalation Bias Refers to the Situation in Which

question 104

Multiple Choice

Escalation bias refers to the situation in which

• A) investors have a propensity to sell winners too soon and hang on to losers too long.
• B) investors ignore bad news and overemphasize good news.
• C) investors tend to follow the herd.
• D) investors put more money into a failure rather than into a success.
• E) investors are all noise traders.

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Definitions:

Eurocurrency Deposits

Time deposits held in banks outside their country of origin but denominated in the currency of the country of origin, often used for international transactions.

Lending Rate

Lending Rate is the interest rate charged by banks on loans extended to clients, reflecting the cost of borrowing money.

Domestic Money Market

A section of the financial market where domestic short-term borrowing and lending of funds occur.

Forward Market

A financial market in which participants can enter into contracts to buy or sell assets at a specified future date and price.