The tendency of investors to hold on to losing investments is called the ________.
A) overweighting effect
B) head-in-the-sand effect
C) disposition effect
D) prospector effect

Question

Quizplus · Accepted Answer

The tendency of investors to hold on to losing investments is called the disposition effect, where they hold on to losses for longer periods of time instead of selling and accepting the loss. The overweighting effect refers to the tendency of investors to place too much weight on certain information, while the head-in-the-sand effect refers to investors ignoring negative information about their investments. The prospector effect refers to investors taking on more risk in their investments when they have experienced success in the past.

The Tendency of Investors to Hold on to Losing Investments