n NISM Certifications
X NISM Series X
Medium

What bias is exemplified when an investor holds a loss-making asset longer than necessary?

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Recency bias

  2. Disposition bias / Loss aversion bias

    Correct answer

  3. C

    Familiarity bias

  4. D

    Bounded rationality

Why this is the answer

This bias involves holding onto losing investments in hopes of recovery, thus ignoring rational exit strategies, and avoiding realizing losses.

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