n NISM Certifications
X NISM Series X
Medium

Which theory did Daniel Kahneman and Amos Tversky introduce in 1979 that explains decision-making under risk?

Practice question from NISM Series XB- Investment Adviser (Level 2) Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. Prospect theory

    Correct answer

  2. B

    Mental accounting theory

  3. C

    Modern portfolio theory

  4. D

    Capital market theory

Why this is the answer

Daniel Kahneman and Amos Tversky introduced Prospect Theory, which describes how individuals evaluate potential gains and losses relative to a reference point, explaining decision-making behavior involving risk.

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