Behavioral Finance - Reading 10: Portfolios, Pyramids, Emot 2009, following, represents, option, class

mayanfang1

Q1. Which of the following best represents a psychological call option?

A)   A client automatically switching or “exercising the option” of switching advisors with each bad recommendation.

B)   A client not following the advice of an advisor and blaming all missed good opportunities on the advisor.

C)   A client following the advice of an advisor but believing his own decisions were the good decisions and that all bad decisions were the decisions of the financial advisor.

Q2. To avoid cognitive dissonance an investor might engage in:

A)   hindsight bias, which leads to a continued overestimation of his skill and blaming his advisor for any poor performance.

B)   random stock selection to be able to blame any loss on luck.

C)   ignoring the advice of the investment advisor.

Q3. Avoiding some investments is a symptom of:

A)   a psychological call option and can lead to an under-diversified portfolio.

B)   fear of regret and can lead to an under-diversified portfolio.

C)   fear of regret and can lead to an over-diversified portfolio.

deqiang

thanks.

rawrdinosaur

ytu

rawrdinosaur

ty

Figo-wong

DC plan investors tend to think about retirement itself (spending days on the beach) but do not think at all about dollar amounts and return requirements. This is a significant factor that limits the ability of defined contribution plan investors to successfully manage their investments.

suodi

[em50]

maxsimax

tq

saintrich

 thanks

space5

thanks

saint_zhu

地方官