
Chartered Financial Analyst Level 1
Get started today
Ultimate access to all questions.
Cognitive Errors in Behavioral Finance
Cognitive Errors in Behavioral Finance
Exam-Like
Explanation:
Cognitive errors, unlike emotional biases, can typically be corrected or mitigated with better information, education, and advice. Emotional biases stem from impulses and intuition, making them harder to address. Both types of biases may lead to decisions that deviate from traditional finance theory. This distinction highlights the importance of understanding behavioral finance concepts in portfolio management.