n NISM Certifications
V-A NISM Series V-A
Medium

A trader believes that he can always outperform the market. This is an example of ____ bias.

Practice question from Nism VA Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Recency

  2. Overconfidence / Optimism

    Correct answer

  3. C

    Herd Mentality

  4. D

    Anchoring

Why this is the answer

The Overconfidence / Optimism bias occurs when individuals overestimate their abilities or judgment, such as believing they can consistently outperform the market. This leads to taking unnecessary risks without proper evaluation.

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