You are managing a well diversified portfolio of risky assets, and have computed the Beta and Alpha coefficients of 3 stocks that are contained in the portfolio. You found the following:

Suppose that the consensus in the market is that stocks A and CCC have an Alpha of 0. If you are not more informed than other investors in the market but you stand behind your estimates in the table above regardless, your behavior likely reflects:

Question 8 options:

A)	an extreme case of loss aversion.

B)	herd behavior.

C)	overconfidence bias.

D)	relative wealth concerns.

Suppose (correctly or incorrectly) that most investors follow the alternative B) in the previous question. What would you expect to happen in the market?

Question 7 options:

A)	The price of both stocks will rise.

B)	The expected returns of both stocks will rise.

C)	The price of stock A will fall and the price of stock CCC will rise.

D)	The expected return of stock A will fall and the expected return of stock CCC will rise.

Given this information, what would you recommend doing?

Question 6 options:

A)	Sell all your shares in A and CCC and invest the proceeds in the risk-free asset.

B)	Sell some A and use the proceeds to buy more CCC.

C)	Buy more of BB and sell CCC in the same amount.

D)	Sell some of BB and use the proceeds to buy more CCC.

Stock	Alpha	Beta
A	-0.05	1.0
BB	0.00	1.0
CCC	0.05	1.0