The Most Important Lesson Investors Can Learn from Behavioral Finance

question 29

Multiple Choice

The most important lesson investors can learn from behavioral finance is

• A) to understand psychological factors influencing long-term price movement.
• B) to have the humility to let professionals manage their investments.
• C) how to avoid letting their emotions and biases affect their investment decisions.
• D) to have confidence in their instincts and first impressions.

---

Definitions:

Fair Values

An estimate of the market value of an asset or liability, based on assumptions of what market participants would use in an orderly transaction at the measurement date.

Common Stock

A type of equity security that represents ownership in a corporation, providing rights to vote on corporate matters and receive dividends.

Acquisition

Acquisition involves purchasing all or a substantial portion of the assets or ownership stakes of a company, effectively bringing it under the control of the acquiring entity.

Consolidated Common Stock

Represents the aggregation of common stock of a parent company and its subsidiaries, shown in the consolidated financial statements.