Long-term historical records regarding return on stocks

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Reference no: EM131813100

1. Based on long-term historical records regarding return on stocks, bonds, and Treasury instruments which of the following asset classes would you expect to provide the highest level of nominal total return over an extended holding period?

US Treasury notes

Global bonds

Domestic small-cap stocks

Domestic large-cap stocks

International large-cap stocks

2. Margaret explains to Marty and Chris that there’s volatility when investing. This up-and-down movement of portfolio value can be quite upsetting, and investor selling at “just-the-wrong” time can really disrupt long-term strategies. Which of the following emotional or cognitive biases (as described by behavioral finance theory) best describes the sabotaging tendency to hang on to losers rather than taking the loss and moving on?

Loss Aversion

Aversion to Ambiguity

Regret Avoidance

Anchoring

Reference no: EM131813100

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