The principle of behavioural finance that stands consistent with the statement" The investor is happy with return ascertained from the Petrie stock in last 2 years and he is sure that this stock will provide extraordinary return in the near future. Introduction: Overconfidence refers to the behavioral bias which stand dangerous, especially in the financial markets. It was assumed that overconfidence does not impact the investor, however the more the investor is overconfidence the more it will impact. In other words, it depicts underestimation of risk, overestimation of knowledge and exaggerating the ability of controlling the events.

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Chapter 12, Problem 4CP

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To determine:

The principle of behavioural finance that stands consistent with the statement" The investor is happy with return ascertained from the Petrie stock in last 2 years and he is sure that this stock will provide extraordinary return in the near future.

Introduction:

Overconfidence refers to the behavioral bias which stand dangerous, especially in the financial markets. It was assumed that overconfidence does not impact the investor, however the more the investor is overconfidence the more it will impact. In other words, it depicts underestimation of risk, overestimation of knowledge and exaggerating the ability of controlling the events.

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