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Capital Market Expectations
Capital Market Expectations
Easy
After a severe bear market, an analyst raises her equity risk premium estimate significantly, citing the recent downturn as evidence that equity markets are riskier than previously assumed. Her behavior is most consistent with:
A
Availability bias, because the recent dramatic event disproportionately influences her risk assessment
B
Prudence bias, because she is being overly cautious after the downturn
C
Confirmation bias, because she is looking for evidence that markets are risky
D
Anchoring bias, because she is anchoring to the recent market bottom
Select an answer to continue
Tags
#availability-bias
#equity-risk-premium
#recency
#psychological-biases
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