-An advisor for Alesi Capital Management is working with a new client, Melanie Stoffer. Prior to meeting with her, the advisor asks Stoffer a series of diagnostic questions to determine whether she may have any of the following investment behavioral biases:
Anchoring
Hindsight
Regret aversion
Representativeness
Status quo
- The diagnostic questions are as follows:
- 1. Would a prior investment decision that resulted in a loss stop you from making a similar decision, even if the new investment appears to be the best alternative?
-2. How frequently do you review your investment portfolio?
-3. Would you sell a recent equity investment following a management announcement of a significant decline in the expected growth rate of revenue?
Identify the behavioral bias that each diagnostic question is most likely to reveal. (Note: each diagnostic question is designed to reveal a different bias.)