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Behavioral Finance Quiz

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1. What is Behavioral Finance?

2. Mental accounting, a concept from behavioral finance, is best defined as:

3. Which bias in behavioral finance explains the tendency of people to rely too heavily on the first piece of information they encounter (anchoring) when making decisions?

4. What is the term used in behavioral finance to describe when an investor is influenced by how much they paid for an investment, rather than the expected future return?

5. In behavioral finance, what term describes the tendency of investors to hold on to losing investments too long?

6. What behavior causes investors to be overconfident and take on too much risk?

7. What is the Prospect Theory in behavioral finance?

8. Which behavioral bias refers to the intuitive belief that good outcomes will be followed by good outcomes and bad outcomes will be followed by bad outcomes?

9. Which cognitive bias may lead an investor to believe that they knew the outcome of an event before it actually happened?

10. What does Regret Theory in behavioral finance suggest?