Podcast
Questions and Answers
Why are rational investors slow to realize gains and quick to realize losses?
Why are rational investors slow to realize gains and quick to realize losses?
- To reduce tax bills (correct)
- To avoid regret
- To speed up their investment growth
- To follow the disposition effect
What is the disposition effect commonly observed among investors?
What is the disposition effect commonly observed among investors?
- Not realizing gains or losses at all
- Being quick to realize losses and slow to realize gains
- Being indifferent to realizing gains or losses
- Being quick to realize gains and slow to realize losses (correct)
What is the 'disposition puzzle' in the context of investor behavior?
What is the 'disposition puzzle' in the context of investor behavior?
- Why taxes do not influence investor behavior
- Why professional investors are immune to the disposition effect
- Why investors display a tendency to realize gains quickly
- Why investors display a tendency to hold onto losing investments (correct)
What combination of factors contributes to the solution of the disposition puzzle?
What combination of factors contributes to the solution of the disposition puzzle?
Why do professional stock traders who incur losses in morning trades trade more aggressively in the afternoon?
Why do professional stock traders who incur losses in morning trades trade more aggressively in the afternoon?
Which common behavioral errors contribute to the disposition effect among investors?
Which common behavioral errors contribute to the disposition effect among investors?
Howard Snyder believed that realizing losses can help reduce taxes.
Howard Snyder believed that realizing losses can help reduce taxes.
Investors are always eager to realize losses in their investments.
Investors are always eager to realize losses in their investments.
Realizing gains yields the emotional benefits of pride.
Realizing gains yields the emotional benefits of pride.
People experience regret when observing a positive return for a stock they chose not to purchase.
People experience regret when observing a positive return for a stock they chose not to purchase.
People are willing to repurchase stocks whose prices increased after they sold them.
People are willing to repurchase stocks whose prices increased after they sold them.
Large disposition effects are exhibited by people who show great reluctance to repurchase stocks.
Large disposition effects are exhibited by people who show great reluctance to repurchase stocks.
LeRoy Gross referred to the reluctance to realize losses as the 'getevenitis disease'.
LeRoy Gross referred to the reluctance to realize losses as the 'getevenitis disease'.
The 'getevenitis disease' has had a positive impact on investment portfolios.
The 'getevenitis disease' has had a positive impact on investment portfolios.
Performance monitoring can lead to higher reported performance but lower actual performance in certain conditions.
Performance monitoring can lead to higher reported performance but lower actual performance in certain conditions.
Normal people tend to mix all their investments into one mental account for easier tracking.
Normal people tend to mix all their investments into one mental account for easier tracking.
One reason people hesitate to sell a stock at a loss is because they prioritize emotional pride over utilitarian gains.
One reason people hesitate to sell a stock at a loss is because they prioritize emotional pride over utilitarian gains.
Individuals who trade stocks may shift responsibility for gains and losses based on emotional reactions.
Individuals who trade stocks may shift responsibility for gains and losses based on emotional reactions.
