Asked by Haley Adams on Jul 24, 2024
Verified
Statman, Fisher, and Anginer (2008) found that stocks ranked high in Fortune's Survey of Most Admired Companies tended to have lower average risk-adjusted returns than the least admired firms. This could be attributed to
A) framing
B) mental accounting
C) affect
D) prospect theory
Risk-Adjusted Returns
Performance measures that evaluate the risk taken to achieve a financial return, accounting for the volatility of returns.
Most Admired Companies
Companies that are highly regarded and respected by their peers, employees, and industry analysts for their management quality and operational performance.
- Analyze the impact of investor psychology on market dynamics and stock prices.
Verified Answer
NY
Nishanth YohanathanJul 27, 2024
Final Answer :
C
Explanation :
The findings suggest that investors may be willing to pay a premium for stocks of companies they admire, which can lead to affect-driven decision making and lower risk-adjusted returns. Affect refers to emotions or feelings that can influence decision making.
Learning Objectives
- Analyze the impact of investor psychology on market dynamics and stock prices.
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