Psychologists have found that people who make decisions that turn out badly blame themselves more when those decisions were unconventional. 

Identify the behavioural bias referred to in the statement. Using a relevant market anomaly, Briefly Explain the behavioural bias you identified.

 

Which of the following statements regarding the covariance of rates of return is least accurate and why? Explain.

 I)  Covariance is positive if two variables tend to both be above their mean values in the same time periods.
II)  Covariance is not a very useful measure of the strength of the relationship between rates of return.
III) If the covariance is negative, the rates of return on two investments will always move in different directions relative to their means.