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What is prospect theory? Why investors tend to sell winners quickly and hold loser too long? Suppose we observe following graph related to price movement

What is prospect theory? Why investors tend to sell winners quickly and hold loser too long?

Suppose we observe following graph related to price movement around merger and acquisition announcement. Explain whether market is efficient or inefficient? What form of efficiency we discuss? Weak, semi-strong, or strong form? Explain.

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