Exam Review - Question 18.1 Question ID#: 52189 The correct answer was D) Howie’s fear is that the 1973 to 1974 event will be repeated and as a result he will suffer a loss of wealth. The negative past event is influencing his future investment decision making. Aversion to ambiguity describes the situation where bad news affects investment decisions more than good news. Howie is not overconfident. An example of investor overconfidence is too little diversification. Howie would have experienced regret if he had lost all his wealth in the 1973 to 1974 event, but there is no evidence given that he experienced financial losses himself. Loss aversion refers to the reluctance to realize losses, in the hopes of a recovery in value. Howie’s fear is related to uncertain future events, not acknowledging a loss that has already occurred. (Study Session 3, LOS 7) ~~~~~~~~~ Isnt aversion to ambiguity just fear of the unknown?
crick, Suggest you read the sticky post about posting copyrighted material.
I don’t understand this either. I think Schweser is over-doing it in this exam! I don’t think real exam is that “out of reach”. And this one I think should be Recallibility.
I’d say recallability also