Question

Investors are reluctant to sell investments below their original purchase price. What does this observation relate to? anchoring. semi-strong form market efficiency. strong form market efficiency. all-around form market efficiency.

Answer 1

Hello Sir/ Mam

YOUR REQUIRED ANSWER IS ANCHORING.

In the context of investing, one consequence of anchoring is that market participants with an anchoring bias tend to hold investments that have lost value because they have anchored their fair value estimate to the original price rather than to fundamentals. As a result, market participants assume greater risk by holding the investment in the hope the security will return to its purchase price.

I hope this solves your doubt.

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