Disposition effect is the tendency of indivudual investors to A. trade too much
ID: 2641984 • Letter: D
Question
Disposition effect is the tendency of indivudual investors to
A. trade too much based on the mistaken belief that they can pick winners and losers better than investment professionals
B. buy stocks that have been in the news, advertised more, have very high trading volume, or recently had extreme (high or low) returns
C. put too much weight on their own experience rather than considering historical evidence
D. hold on to stocks that have lost value and sell stocks that have risen in value since the time of purchase
Explanation / Answer
Correct option:
D. hold on to stocks that have lost value and sell stocks that have risen in value since the time of purchase