1. Which are types of information processing errors?

Check all that apply:

A. Forecasting errors

B. Representativeness bias

C. Regret avoidance

D. Conservatism bias

E. Overconfidence

2. Investors trading a lot is an example of _____.

A. representativeness bias

B. conservatism bias

C. forecasting errors

D. overconfidence

3. Information processing theory on forecasting errors state that _____.

A. investors give more weight to recent experiences than prior beliefs and information, and therefore create forecasts that are biased.

B. investors are too influenced by external factors and therefore, are prone to forecasting using irrelevant information.

C. an individual's existing personal beliefs are likely to dominate the forecasting process.

D. the information presented to the forecaster has a lesser effect on the forecasting process depending upon the forecaster's perception of this information.

4. Which of the below scenarios best describes mental accounting?

A. The tendency for investors to assess investment decisions based on the manner that the choice is posed to the investor.

B. Freely accessing and spending dividend returns, but refusing to sell a single stock that has a similar rate of return for the same purpose.

C. Deciding not to trade any stocks on a day when the S&P has remained stable.

D. Buying more of a certain stock because you are pleased with the company's recent performance