Some recent developments in financial research focus on ways to make portfolio allocations and other investment decisions in ways that largely ignore the possible gains but protect against large losses. These tools are designed to reflect ________ behavior among investors.
A) risk neutral
B) substitution
C) loss aversion
D) anchoring

Question

Quizplus · Accepted Answer

The tools mentioned are designed to protect against large losses, which reflects the behavior of loss aversion among investors. Loss aversion means that investors tend to feel the pain of losses more than the pleasure of gains, and are therefore more likely to make decisions that protect against losses rather than seeking higher gains.

Some Recent Developments in Financial Research Focus on Ways to Make