NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Basics of Behavioural Finance
Which of the following is an emotional bias rather than a cognitive bias?
Loss aversion is the emotional bias. It stems from feelings about losses rather than faulty reasoning, while anchoring, confirmation and availability biases are cognitive errors in processing information and are more correctable.
- ALoss aversionCorrect
- BAnchoring
- CConfirmation bias
- DAvailability bias
Explanation
Emotional biases arise from feelings or impulses and are harder to correct by providing information; loss aversion is one. Anchoring, confirmation and availability biases are cognitive errors in information processing, which can often be reduced through better information and training.
Did you get it right without looking?
One question tells you little. A timed set on Basics of Behavioural Finance shows your real accuracy, how long you take and where you lose marks.
More Basics of Behavioural Finance questions
- A client refuses to sell a mutual fund scheme that has fallen 30% below her purchase price, saying she will sell only when it 'gets back to …
- According to prospect theory, which statement about how people value outcomes is correct?
- Meera, a client, always allocates exactly one-third of her money to each of three buckets: a savings account, a fixed deposit and an equity …
- Ms. Kavya Nair inherited Rs 10 lakh and treats it as 'free money', investing it entirely in speculative small-cap stocks, while she keeps he…
- Mr. Rao, a 45-year-old IT professional, bought shares of a company because his friend earned good returns on it. He ignored the fundamentals…
- Which of the following is an example of an emotional bias, rather than a cognitive error, in behavioural finance?