Representativeness,according to financial economists,leads to
A)overreactions in stock returns.
B)abnormal long-term profits.
C)stock price under reactions to new information.
D)stable stock returns over both short and long periods of time.
E)strong form efficient financial markets.

Question

Quizplus · Accepted Answer

Representativeness bias causes investors to believe that new information is representative of past trends and therefore overreact to it. This can cause overreactions in stock returns.

Representativeness,according to Financial Economists,leads to