Question

Psychologists have observed that: Multiple Choice once investors have made a loss, they become much more willing to take risks. investors tend to place too much faith in their ability to spot mispriced stocks. when forecasting the future, people tend to place too little weight on recent events. investors like stocks of companies whose names begin with letters that occur early in the alphabet.

Answer 1

Answer:

investors tend to place too much faith in their ability to spot mispriced stocks.

Explanation:

Risk management can be defined as the process of identifying, evaluating, analyzing and controlling potential threats or risks present in a business as an obstacle to its capital, revenues and profits. This ultimately implies that, risk management involves prioritizing course of action or potential threats in order to mitigate the risk that are likely to arise from such business decisions.

Psychologists have observed that investors tend to place too much faith in their ability to spot mispriced stocks.

This ultimately implies that, investors usually feel they can tell a mispriced stock caused by the behavior of market participants.