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Reading 57: Market Efficiency-LOS g 习题精选

Session 13: Market Organization, Market Indices, and Market Efficiency
Reading 57: Market Efficiency

LOS g: Compare and contrast the behavioral finance view of investor behavior to that of traditional finance in regards to market efficiency.

 

 

An investor who is more risk averse with respect to potential negative outcomes than potential positive outcomes most likely exhibits:

A)
gambler’s fallacy.
B)
loss aversion.
C)
mental accounting.


 

Loss aversion is exhibited by an investor who dislikes a loss more than he likes an equal gain. That is, the investor’s risk preferences are asymmetric. Gambler’s fallacy is the belief that recent past outcomes affect the probability of future outcomes. Mental accounting refers to mentally classifying investments in separate accounts rather than considering them from a portfolio perspective.

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