Question
Why do many documented anomalies weaken over time?
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Answer
Investors exploit them, or they proxy for risk.
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Question
An investor classifies a firm by stereotype and ignores base rates. Which bias is this?
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Answer
Representativeness.
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Question
How does market value differ from intrinsic value in equity analysis?
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Answer
Market value is current price; intrinsic value is estimated true worth.
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Question
Investors buy simply because everyone else is buying, helping fuel a bubble. Which bias is this?
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Answer
Herding.
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