The disposition effect refers to:
A)the underreaction of investors to bad news.
B)selling any security that creates a tax liability.
C)the hesitancy to sell a security of any firm with which you are affiliated.
D)the urge to sell all your securities when market values decline.
E)selling your winners while holding your losers.

Question

Quizplus · Accepted Answer

The disposition effect refers to the tendency of investors to sell their winning investments too early, while holding onto their losing investments for too long in order to avoid realizing a loss. This behavior has been attributed to the emotional pain of realizing a loss compared to the pleasure of realizing a gain, also known as loss aversion.

The Disposition Effect Refers To