According to Your Textbook,what Is One Reason Why People Tend

question 6

Multiple Choice

According to your textbook,what is one reason why people tend to make poor investing decisions,such as selling a stock immediately after it has lost a significant amount of value?

• A)People tend to be place more value on money lost than on money gained,a bias known as loss aversion.
• B)The new value of the stock serves as an anchor,which causes the investor to think the stock is worth less than it really is.
• C)Investing strategies form a mental set,which interferes with the investors adjusting to the new value of the stock.
• D)The availability heuristic leads the investors to sell the stock so they can increase the availability of money to reinvest.

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Definitions:

Developmental Change

Transformations or transitions in the psychological, emotional, or physical state of a person or group over time.

External Validity

The extent to which the findings of a study can be generalized to other people, settings, times, measures, and characteristics.

Internal Validity

The extent to which a research study accurately reflects or assesses the specific concepts or variables it is intended to measure.

Descriptive Field Studies

Research that involves observing and describing the behavior of subjects in their natural environment.