2008 AM - behavior bias

"I am holding a large position in Omega Corporation with a large unrealized loss. Omega’s stock price declined last year when reported sales and earnings failed to meet analyst expectations. I took advantage of the decline to increase my position. Omega sales growth has continued to slow over the last year, but I believe the stock is still a good investment.”

Which behaivor bias exists?

The 2008 AM solution is Regret avoidance. Is it equal to loss aversion? Thanks.

You can have loss aversion without regret avoidance and vice versa so they are not the same. But in this case I would say they both occur.

He is displaying regret avoidance from avoiding to admit to entering into crappy trade and selling his postion. And he is displaying loss avoidance by holding onto the loser too long.

Thanks. Regret avoidance is regret aversion (2015 worlding)?

Sounds like loss aversion when you bought more initially and anchoring after.


It is loss aversion

My first thought is loss aversion as well. However, the guideline answer is Regret avoidance.

I believe it’s both?

My bad. It is regret aversion. I did not read through. There is " priori" which I overlooked.

If loss aversion were an option, I would have chosen that. Though none of the other options fit for this situation, so by elimination, I did choose regret avoidance.

I am feeling a little silly, but the 2008 Morning Q1 Part D (ii), my BA 2 Plus is throwing up 7.55% instead of 8.48%. Did anyone get 8.48%? If yes, I’m certainly doing it wrong.

You are doing it wrong.

They are taking money OUT of the portfolio for the mortgage payment, so your PMT should be -$55k and not +$55k.

got it. my bad.