Equity Investments Q135

0. The behavioral finance theory which explains how investors can be slow to react to new information and continue to maintain their prior views or forecasts is most accurately described as:

  • Option : B
  • Explanation : Conservatism is the behavioral finance theory in which investors tend to be slow to react to new information and continue to maintain their prior views and forecasts. Narrow framing involves investors focusing on issues in isolation while representativeness involves investors assessing probabilities of outcomes depending on how similar they are to the current state.
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