Can someone help to identify questions that are out of date? I see things like housing money effect, which clearly is not in the 2008 LOS anymore.
I think you mean House Money Effect which I believe is still relevant…
yes, it is in the cfa text
got this from a website: “…house money effect proposed by Thaler and Johnson (1990), which claims that people may indeed increase their risk-taking after prior gains under some circumstances. The authors argue that, “after a gain, subsequent losses that are smaller than the original gain can be integrated with the prior gain, mitigating the influence of loss aversion and facilitating risk-seeking” (p657, Thaler and Johnson 1990).”
It’s an easy one too…Think of going ot a Casino. If I go with $100 and I hit the Craps table and say I win $100 so now I have $200…I pocket my original $100 and gamble with the rest of the money b/c its “House Money” i.e. the Casino’s Money. I take more risk with this $100 b/c I dont really see it as my money and if I lose, well I lose it b/c I didnt have it to begin with so no Regrets :).
Also, “Housing Money Effect”, as you wrote it, sounds like some liberal plan initiated by Hillary or Obama… 
All the questions of this year free online exam sample come from CFAIII 2006 exam and 2007 online sample! I will try the next two online exams. Hope I can find sth new!
huh? The 2006 and 2007 exams are Essay, the Sample is Item Set??
House money effect is in volume 2 of CFAI texts. I dont remember exact reading # but it is in one of the behavioral finance readings.
house money is a type of mental accounting or frame dependance i guess
ok. my bad. 1. CFAI Sample exam here refers to the essay on with guideline answer. 2. Yes, house money effect is indeed in vol2. So are all the 2005~2007 sample essay exam still relevant??