Asked by Taylor Salone on Apr 24, 2024
Verified
An investor holds a very conservative portfolio invested for retirement, but she takes some extra cash she earned from her year-end bonus and buys gold futures. She appears to be engaging in ________.
A) overconfidence
B) representativeness
C) forecast errors
D) mental accounting
Mental Accounting
A psychological phenomenon where people treat money differently depending on its origin, intended use, or other subjective criteria.
Gold Futures
Contracts to buy or sell gold at a future date at a price that is agreed upon today, used for speculation or hedging.
- Learn about the foundational elements of behavioral finance and the influence of psychological factors on how investors behave and market conditions evolve.
Verified Answer
ZK
Zybrea KnightMay 02, 2024
Final Answer :
D
Explanation :
The investor appears to be engaging in mental accounting by treating her bonus cash differently from her other retirement investments and investing it in gold futures.
Learning Objectives
- Learn about the foundational elements of behavioral finance and the influence of psychological factors on how investors behave and market conditions evolve.