n NISM Certifications
NSM General NISM
Medium

A client wants to invest in small-cap funds after seeing high returns in the past year. Which bias is this?

Practice question from B1 Intermediate Session 6 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Recency Bias

    Correct answer

  2. B

    Herd Mentality

  3. C

    Framing Bias

  4. D

    Loss Aversion

Why this is the answer

Recent performance becomes overly influential, making investors assume current trends will continue.

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