The bandwagon effect is a cognitive bias that causes people to do something because they see that others are doing it. It is a form of social influence that can affect many…
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Independent and Dependent variables in statistics
In statistics, an independent variable is a variable that is manipulated or controlled in order to observe its effect on the dependent variable. The dependent variable is the variable that is being…
What is Cognitive load?
Cognitive load is the amount of mental effort required to process information and make decisions. In finance, cognitive load can impact decision-making processes and outcomes, as individuals and organizations can become overwhelmed…
Unbounded rationality in Finance
Unbounded rationality is a theoretical concept that suggests that individuals and organizations have no cognitive or resource limitations in their ability to make fully rational decisions. In other words, it assumes that…
What is Bounded rationality?
Bounded rationality is a concept in economics and psychology that suggests that individuals and organizations have limitations in their ability to make fully rational decisions. Instead, individuals and organizations operate within cognitive…
Status Quo Bias in the Finance
Status quo bias is a tendency to prefer the current state of affairs and resist change. In finance, status quo bias can manifest in various ways, such as: In general, status quo…
What Was Long-Term Capital Management (LTCM)?
Long-Term Capital Management (LTCM) was a hedge fund founded in 1994 by a group of highly successful investors, including Nobel Prize-winning economists Myron Scholes and Robert Merton. The fund’s primary strategy was…
What are the types of Merger and advantages ?
Forms of integration The different forms of integration are Statutory merger, Subsidiary merger, and Consolidation merger. Statutory merger, the acquiring company takes control of all the target assets and liabilities. this means…
Use of Financial Ratios for Company Analysis
Liquidity Ratio The organization needs to meet the obligation in one year or in the short run. Liquidity ratios can be identified with the relationship between current assets and current liabilities. Some…
Can Risk and Return on investment go together?
Risk is uncertainty and return is a reward for taking the risk. Return is the expected cash inflows from the investment. The risk is good. Chinese use symbols like danger and opportunity….