The disposition effect relates to the fact that:
A)investors tend to overconfident regarding potential stock prices.
B)investors often experience regrets about trading decisions.
C)investors are more likely to sell winners than losers.
D)investors tend to dispose of stocks at the end of the year.

Question

Quizplus · Accepted Answer

The disposition effect refers to the tendency of investors to sell their winning stocks too soon and hold on to losing stocks for too long. This is thought to stem from a desire to avoid the regret that comes from selling a stock that goes on to perform even better, but it can lead to suboptimal investment outcomes. The other answer choices do not accurately describe the disposition effect.

The Disposition Effect Relates to the Fact That