Describe clearly how theories from behavioural finance can justify the following phenomena of investment:

(1)An investor is asked to choose between two investments with the same initial cost of $5:

Investment A: there isa 0.01% chance ofearning $45,000 and a 99.99% chance ofearning$0Investment B: there isa 100% chance ofearning $5

The investor has a strong preference for investment A.

(2)An investor believes that the decrease in value of her security is not a loss until it is realized (i.e., when she sells the security)

3)An earnings announcement is an official public statement of a company's profitability, usually issued on a quarterly basis. There are two ways a firm could announce its earnings per share (EPS) in quarter 2: Statement 1 Our EPS in quarter 2 is $1.11, compared to $1.21 forecasted by analysts.Statement 2 Our . EPS n quarter 2 is $1.11, compared to $1.01 in quarter 1.Researchers find that investors respond more positively to statement 2 compared to statement 1.