Which term best applies to the situation where an investor cares less about losing $1 of his profits than he does about losing $1 of his original investment?
A)Get-evenitis
B)Snakebite effect
C)Familiarity
D)Home bias
E)House money effect

Question

Quizplus · Accepted Answer

The House money effect is the tendency of investors to take more risks when they are trading with profits gained from previous trades, effectively considering those profits as "house money". In this situation, the investor is more willing to take risks with his profits rather than his original investment, as losing the profits feels less painful than losing the investment that was originally made.

Which Term Best Applies to the Situation Where an Investor