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What does behavioural finance suggest about investor decision-making?

  1. A Systematic cognitive and emotional biases cause deviations from rational behaviour
  2. B Investors are always rational
  3. C Markets are always efficient
  4. D Prices reflect no information
Answer

Systematic cognitive and emotional biases cause deviations from rational behaviour

Loss aversion, overconfidence, anchoring and herding are among the most commonly documented biases.

All CFA MCQs

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