Chartered Financial Analyst Level 1

Chartered Financial Analyst Level 1

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Cognitive Errors in Behavioral Finance



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.