Savvy investor can spot other peoples mistakes in market

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Reference no: EM131603232

Given that Behavioral Finance helps confirm that people make investing mistakes, select the best answer regarding the opportunity for other investors (‘savvy investors’) to profit from these mistakes:

a. If a savvy investor can spot other peoples’ mistakes in the market, the savvy investor will be able to profit from these mistakes by using a procedure called ‘Arbitrage’.

b. Savvy investors will tend to have more opportunity for profits if the mistakes are shortterm in nature but less or no opportunity for profits if the mistakes are chronic or structural in nature.

c. When bubble market periods occur such as technology & internet stocks in the late 1990’s and real estate-related investments in the mid-2000s, the extreme price gaps relative to fundamental value and the many years these gaps exist allow savvy investors to spot the opportunities and to take advantage of them.

Reference no: EM131603232

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