Investment Planning Global -8 ( Behavioural Finance)

What is correct about Behavioral Finance?

What is called rationalizing the actions that enable a person to adhere to the original course?

A Person is smoking for quite a long time. He recently came to know that excessive smoking can cause cancer but his perception is due to his daily routine of physical exercise it can’t happen to him. This is an example of _______.

Sometimes investors fail to acknowledge or deny negative information about security, even when that information is substantial and credible,What kind of bias it is ?.

Rakesh has been an equity investor and last time in the crisis of the market he invested in Pharma stock and earned good money now again he wants to enter a high level of market in pharma stocks in quantity as his experience in past has been very good with the same, it’s an example of _____.

Sarvan has a long dues of credit card. He gets the bonus from his company and instead of paying that dues he goes on holiday from that bonus amount, what kind of bias Sarvan has ?

Vishu is a High Networth Individual. You suggested him to invest some money in equities as most of his investment is only in Fixed Deposit. He tells you that he understands the risk, but doesn’t like and is not comfortable with the volatility of the Equity at all. What kind of bias it is?

An investor is giving more emphasis on last year’s negative returns only for choosing a fund as compared to 5 years’ continuous positive returns before last year. What kind of bias it is?

What is least likely to be correct about Optimism ?

Rama Shankar is not able to sell his securities as he is always asking a very high price for the securities which he owns as compared to the market. Is this an example of bias?

The people who think that desire to have more money may negatively impact relationships and life enjoyment are called?

The fear that any decisive action may prove to be less than optimal. The individual attempts to reduce or eliminate the pain of regret associated with poor decision-making. Which concept is it?

Mr. F enjoys holding on to their money. It is difficult for him to spend money on luxury or pleasurable items for himself or his loved ones. To which category he belongs?

Mr. J tries to avoid having too much money. They would feel guilty if they received a large amount of money unexpectedly. To which category he belongs?

For Mr. D safety and security of money is above all else. He doesn’t like financial surprises and prefers low-risk investments, even if they produce low returns. To which category he belongs?

Investors who are overly concerned with keeping large amounts of money at their disposal to spend, save and invest. Which category do they belong?

______ can be defined as the science of applying psychology to finance.

Which of the behavioral bias the investor has is referred to here: “Newly acquired information conflicts with a pre-existing understanding, people may experience mental discomfort.”

______ refers to the specific denial of, or under-reaction to, new information, because it may negate a previous forecast or information that led to making the original decision.

Which biasness is reflected from the investor relying on stereotypes to make a decision?

People betting money in Casinos illustrate which of the following?

People tend to overestimate the accuracy of their own predictions. As a result, people may tend to overestimate their prediction ability and underestimate actual levels of uncertainty. Which biasness it represent?

_____ is the tendency to respond to various situations differently based on the context in which a choice is presented or framed.

_____ is the tendency of individuals to ascribe their successes to talent or foresight while blaming failures on outside influences.

Which of the following biasness causes an individual to place more emphasis on recent events than those that occurred in the past?

_____ assumes that losses and gains are valued differently, and thus individuals make decisions based on perceived gains instead of perceived losses.

The concept of _____ draws on the tendency to attach our thoughts to a reference point – even though it may have no logical relevance to the decision at hand.

Believing that “Bad events (or investments) will not happen to me, only to other people” is delusional. An investor shows what type of emotional biases here?

Mr. D is a person with the tendency to consume today rather than save for tomorrow. Which type of biasness is this?

_____ is placing a higher value on an owned asset over assets that are not owned.