The tendency to hold onto losing stocks in the hope that they will recoup is called loss aversion.
Loss aversion is a cognitive bias that explains why the pain of loss has twice as much psychological impact as the joy of winning. Losing money or another valuable item can feel worse than gaining the same. This principle is prominent in the field of economics. What distinguishes loss aversion from risk aversion is that the utility of monetary rewards depends on what has been previously experienced or expected.
In the realm of behavioral choice, 'loss aversion' is a behavioral phenomenon in which individuals exhibit greater sensitivity to potential losses than gains. Conversely, “risk-averse” people have an increased sensitivity/aversion to options with uncertain outcomes.
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Answer:
This statement is True
Explanation:
Ethnocentrism is simply a term used to describe the idea of someone feeling like his culture or believes and values are naturally superior to that of others, judging other cultures using the beliefs and values of his culture. It does not only relate to only culture and values, but also look at things such as religion, language, custom, and behavior.
The potential benefit given up when selecting one alternative over another is a(n) opportunity cost.
Opportunity costs are the possible advantages that a person, investor, or company forgoes while deciding between two options. Opportunity costs are by definition invisible, making it simple to ignore them. Making smarter decisions requires an understanding of the possible opportunities lost when a company or person selects one investment over another. The difference between the anticipated returns of each alternative is all that needs to be considered when estimating an opportunity cost.
The determination of a company's capital structure involves opportunity cost analysis in a significant way. To pay lenders and shareholders for the risk of their investments, a corporation must incur costs when issuing both debt and equity capital, but each has an opportunity cost as well.
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