The household money effect is a behavioral finance concept that people take more risks when they win than they do otherwise.
The effect may be related to the perception that the investor has new money that did not belong to him.
There are many examples of this effect, but they all show a general lack of rigor.
The money house effect should not be confused with a predetermined, mathematically calculated strategy for increasing position size when higher than expected profit occurs.
An overreaction in the financial markets is when securities become overbought or oversold for psychological reasons rather than for fundamental reasons.
Risk acceptance or risk containment is a conscious strategy of recognizing the possibility of small or rare risks without taking measures to hedge, hedge or avoid these risks.
Animal spirits come from the Latin spiritus animalis: “breath that awakens the human mind.” It was introduced by the British economist John Maynard Keynes in 1936.
Arbitrageurs are investors who exploit market inefficiencies of any kind. They are necessary to ensure that inefficiencies between markets are smoothed out or kept to a minimum.
Asset-Backed Securities (ABS) are financial securities backed by income-producing assets such as credit card receivables, home equity loans, student loans, and auto loans.
Audit risk is the risk that the financial statements will be materially incorrect, even if the auditor’s report indicates that the financial statements do not contain any material misstatement.