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Indian Institute of Foreign Trade 2010 Solved Paper

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Question : 72 of 135

Marks: +1, -0

The author of the passage suggests the anomaly that leads to systematic errors in predicting future. Which of the following statements does not best describe the anomaly as suggested in the passage above?

I. The psychological pressures account for the anomalies just like soothsayers warning about the doomsday and natural disasters and market crashes.

II. Contrary to several economic and financial theories investors are not good intuitive statistician, especially under difficult conditions and are unable to calculate the odds properly when making investments choices.

III. Investors are swamped with information and they react to this avalanche of data by adopting shortcuts or rules of thumb rather than formally calculating odds of a given outcome.

IV. The distortions produced by subjectively calculated probabilities are large, systematic and difficult to eliminate even when investors are fully aware of them.

Only I
Only IV
I and III
II and IV

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