The figure below displays the difference in the average returns of the stocks in the highest decile of CAF and those in the lowest decile of CAF. CAF is defined as follows: CAF = EPS forecast of a firm - Median EPS forecast of other firms in the same Industry EPS stands for earnings per share. In essence, CAF captures how far the EPS forecast of a particular firm is from the median EPS forecast of the firms operating in the same industry Stocks in decile 1 of CAF are the stocks with the lowest value of CAF. The difference in the EPS forecast of such stocks and the median EPS forecast of their industry peers will be the least. Stocks in decile 10 of CAF are the stocks with the highest value of CAF. For such stocks, the difference in their EPS forecast and the median of the EPS forecast of their industry peers will be the highest. The stocks in decile 10 of CAF continue earning high returns over the next few months, and the stocks in decile 1 of CAF continue earning low returns. A trading strategy involving going long (buying) on the stocks in decile 10 of CAF and going shorting (selling) the shcks in decile 1 of CAF leads to high cumulative portfolio returns over the next few months. The same is shown in the figure below. Explain the behavioral biases and the mechanisms which could result in the pattern of observed stock returns based on the difference in the forecast of a firm's EPS and the median value of the EPS forecast of the other firms operating in the same industry. (Maximum 100 words) 30% -Equal-Weighted 30% Equal-Weighted 25% 20% Cumulative Hedge Portfolio Returns (%) 15% 10% 5% 0% 3 5 7 9 11 13 15 17 19 21 23 25 27 29 33 33 Holding Period (months) The figure below displays the difference in the average returns of the stocks in the highest decile of CAF and those in the lowest decile of CAF. CAF is defined as follows: CAF = EPS forecast of a firm - Median EPS forecast of other firms in the same Industry EPS stands for earnings per share. In essence, CAF captures how far the EPS forecast of a particular firm is from the median EPS forecast of the firms operating in the same industry Stocks in decile 1 of CAF are the stocks with the lowest value of CAF. The difference in the EPS forecast of such stocks and the median EPS forecast of their industry peers will be the least. Stocks in decile 10 of CAF are the stocks with the highest value of CAF. For such stocks, the difference in their EPS forecast and the median of the EPS forecast of their industry peers will be the highest. The stocks in decile 10 of CAF continue earning high returns over the next few months, and the stocks in decile 1 of CAF continue earning low returns. A trading strategy involving going long (buying) on the stocks in decile 10 of CAF and going shorting (selling) the shcks in decile 1 of CAF leads to high cumulative portfolio returns over the next few months. The same is shown in the figure below. Explain the behavioral biases and the mechanisms which could result in the pattern of observed stock returns based on the difference in the forecast of a firm's EPS and the median value of the EPS forecast of the other firms operating in the same industry. (Maximum 100 words) 30% -Equal-Weighted 30% Equal-Weighted 25% 20% Cumulative Hedge Portfolio Returns (%) 15% 10% 5% 0% 3 5 7 9 11 13 15 17 19 21 23 25 27 29 33 33 Holding Period (months)