Louise and Christopher Maclin live in London, United Kingdom, and currently rent an apartment in the metropolitan area. During an initial discussion of the Maclins’ financial plans, Christopher Maclin makes the following statements to the Maclins’ financial adviser, Grant Webb:
a. “I have used the Internet extensively to research the outlook for the housing market over the next 5 years, and I believe now is the best time to buy a house.”
b. “I do not want to sell any bond in my portfolio for a lower price than I paid for the bond.”
c. “I will not sell any of my company stock because I know my company and I believe it has excellent prospects for the future.” For each statement ( a )–( c ) identify the behavioral finance concept most directly exhibited.
Explain how each behavioral finance concept is affecting Maclin’s investment decision making.
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