Home bias refers to the preference of the investors to make financial investment in home market even if investment in foreign equities yield better returns and less risk. Various factors are leading to home bias like foreign investment requires complicated legal restrictions and transitional costs. secondly domestic market is more familiar. Though it affects diversification and returns, it is still favorable in most of the countries.
Katelyn is not putting any effort to do the job by not contributing, but still gets rewarder for the high grade. A free rider is someone who takes credit for a job the person did not do. Katelyn is taking this type of credit, so she is a free- rider.
