WorksheetsBehavioural Science
Total questions: 15
Worksheet time: 8mins
Which of the following best describes cognitive dissonance?
The tendency to stick with the status quo despite new evidence.
The discomfort experienced when holding conflicting beliefs or receiving contradictory information.
The tendency to overestimate one's own skills and knowledge.
The bias towards seeking information that confirms existing beliefs.
What is an example of conservatism bias in investing?
Selling a stock after it significantly drops in price due to fear of further losses.
Ignoring new market trends and maintaining old investment forecasts despite new data.
Following a popular investment recommendation without research.
Diversifying investments to reduce risk based on recent performance.
Which bias is demonstrated when an investor only pays attention to news that supports their pre-existing views?
Confirmation Bias
Availability Bias
Self-Control Bias
Status Quo Bias
Representativeness bias can lead to which of the following errors?
Overreacting to recent data due to an overemphasis on its significance.
Relying too much on the similarity of an investment to a well-known category without considering its unique risks.
Misinterpreting historical data as irrelevant due to recent changes.
Ignoring well-established financial models in favor of recent trends.
How does the illusion of control bias affect investment decisions?
It leads investors to believe they can influence market outcomes through their actions.
It makes investors more cautious about taking any action due to fear of making mistakes.
It causes investors to overly rely on recent performance data
It leads investors to avoid any risky investments to prevent potential regret.
What is a common effect of hindsight bias on investors?
Overconfidence in their ability to predict future market movements.
Difficulty in recalling past market trends.
Excessive caution in making investment decisions.
Misjudging the ease of recalling past predictions versus actual outcomes.
In the context of mental accounting bias, which of the following is most likely?
Investing a bonus in a high-risk stock while keeping other investments conservative.
Treating all investments the same regardless of their source or purpose.
Diversifying investments equally across all available assets.
Adjusting investment strategies based solely on historical performance.
What is the primary reason behind herding behavior in financial markets?
A desire to be different from the majority.
The tendency to follow others to avoid personal responsibility if things go wrong.
The intention to make independent investment decisions.
A belief in one's superior market knowledge compared to others.
Which bias leads an investor to avoid changing their current investment portfolio despite new information?
Endowment Bias
Status Quo Bias
Regret Aversion Bias
Overconfidence Bias
In the Dot-Com Bubble, which bias led investors to hold on to tech stocks despite signs of a market correction?
Loss Aversion Bias
Self-Control Bias
Regret Aversion Bias
Endowment Bias
Which emotional bias might cause an investor to overvalue a stock simply because they own it?
Self-Control Bias
Endowment Bias
Loss Aversion Bias
Overconfidence Bias
How does availability bias affect investors’ perception of market risks?
It causes them to focus on less recent and less memorable information.
It leads them to prioritize information that is easily recalled or recently encountered.
It makes them rely heavily on technical analysis over news reports.
It encourages them to disregard easily accessible data.
Which bias might make an investor reluctant to sell a losing stock due to fear of realizing a loss?
Regret Aversion Bias
Status Quo Bias
Loss Aversion Bias
Overconfidence Bias
What effect does overconfidence bias typically have on an investor’s market predictions?
It leads to more conservative investment strategies.
It results in a more accurate assessment of market risks.
It causes them to overestimate their ability to predict market movements.
It reduces the tendency to follow market trends.
An investor decides to sell a stock after a significant drop to avoid further losses, but they fail to realize that the potential for future gains might be high based on long-term trends. What bias are they exhibiting?
Loss Aversion Bias
Anchoring Bias
Self-Control Bias
Representativeness Bias
