(10 pts) 1. A financial advisor is meeting with a potential new client. His client begins the meeting by outlining his investment philosophy as shown below. Describe the behavioral finance concept that most directly illustrates each of the following investment philosophy statement. Explain your answers. Also briefly discuss how each of the statements can be countered using one conventional (i.e., traditional) finance argument. Client's Investment Philosophy Statement number Statement 1 2 Income needs should be met entirely through interest income and cash dividends. All equity held should pay cash dividends. I will direct the purchase of investments, including derivative securities, periodically. These aggressive investments result from personal research and may not prove consistent with my investment policy. I have not kept records on the performance or similar past investments, but I have had some big winners. If an investment falls below the purchase price, that security should be retained until it returns to its original cost. Conversely, I prefer to take quick profits on successful investments. 3