Behavioral Finance Quiz

CFA Level III
#1

The tendency of investors to hold on to losing investments longer than winning investments can be best described by A. Belief Perseverance B. Overreaction C. Loss aversion

#2

loss aversion

#3

C

#4

c

#5

C…don’t want to admit that they are facing losses (“they’re only paper losses”)

#6

Never heard of A, is that in the text?

#7

Technically it could be also A also. But the answer is C.

#8

C

#9

The answer is A. CFAI Vol 2 page 296. The book mentions regret avoidance as another possibility as well.

#10

A) for my opinion that C is correct

#11

C.

#12

A he doesn’t sell loss portion for it will show he had made a bad decision

#13

i can connect it to both…belief perseverance and loss aversion. in such cases… how does one decide (esp when they ask … which is the ‘most’ appropriate)

#14

With 85% picking C it should be thrown out by the angoff method regardless.