Problems with Behavioral Finance Include

question 64

Multiple Choice

Problems with behavioral finance include:
I. The behavioralists tell us nothing about how to exploit any irrationality.
II. The implications of behavioral patterns are inconsistent from case to case, sometimes suggesting overreaction, sometimes underreaction.
III. As with technical trading rules, behavioralists can always find some pattern in past data that supports a behavioralist trait.

• A) I only
• B) II only
• C) I and III only
• D) I, II, and III

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Definitions:

Interpret

To explain the meaning of information, words, or actions.

Emotional Regulation

The ability to manage and respond to an emotional experience in a way that is socially tolerable and flexible.

Sensitized

The state of being made more responsive or sensitive to a specific stimulus after exposure to it.

Physiological Reactions

The body's automatic responses to internal or external stimuli, often involving changes in heart rate, respiration, perspiration, and other bodily functions.