2011 Exam Question 1b

One of the questions (1 B ii) asks to illustrate an example of frame dependence. The answer key goes on to say that frame dependence is loss aversion. Which makes no sense to me. Framing is a cognitive error in which you answer questions differently based on how questions are asked. Loss aversion is an emotional bias. Is anyone else confused?

you are talking about this statement… it is not loss aversion

I notice you have been holding portfolio positions where current values have been below cost for a while.

kind of got the answer here http://www.analystforum.com/forums/cfa-forums/cfa-level-iii-forum/91310466 , if anyone is interested.

cpk123, I’m talking about the answer key. It says it is loss aversion. After searching in the analyst forum I found out that the behavioral portion of the curriculum changed quite a bit. This is my first time taking level 3 so I wasn’t aware. Anyways, I posted a link above.

they explain it as "investment frame is to avoid losses (hence loss aversion) rather than reevaluate holdings.

Just realized the dude that answered the q before was you. Lol. Thanks.