Which of the following is an insight from behavioral finance?
A) The price of securities fully reflects all available information.
B) Investor overconfidence leads to high trading volumes.
C) The optimal forecast of a security's return equals the security's equilibrium return.
D) Investment advisers cannot consistently beat the market.

Question

Quizplus · Accepted Answer

Behavioral finance is a field that combines psychology and finance. It studies how people's biases and emotions affect their investment decisions. Overconfidence is a common cognitive bias that causes investors to be too optimistic about their abilities to predict the future performance of securities, leading to high trading volumes.

Which of the Following Is an Insight from Behavioral Finance