Emma made the following two statements during a meeting with her financial adviser: • “I am pleased with the returns from Apple because I have specific uses for that money. For that reason, I certainly want my son’s education fund to continue owning the Apple stock.” • “I have been very pleased with the returns I have earned on the Amazon stock over the past 3 years and I am certain that it will be a superior performer in the future.” Q1) Identify and discuss the behavioural finance concept that is most consistent with each of Emma’s two statements. Q2) Discuss whether behavioural biases are likely to affect equilibrium asset prices.

Joe is a new investor and has been closely watching a company by the name of USA Ltd., a pharmaceutical company aiming to develop a coronavirus vaccine. Joe believes the following returns are possible in 2022 and has attached a probability to each potential outcome:     Probability Possible Return .20 185.00% .30 83.50% .30 -5.00% .20 -100.00% d) Joe is considering investing all his savings in buying shares in USA Ltd.  Explain to Joe why he should not do this by referring to the risk/return trade-off and what action Joe can take to reduce some of the risk

Required information [The following information applies to the questions displayed below.] Sandy and John Ferguson got married eight years ago and have a seven-year-old daughter, Samantha. In 2023, Sandy worked as a computer technician at a local university earning a salary of $153,300, and John worked part time as a receptionist for a law firm, earning a salary of $30,300. Sandy also does some Web design work on the side and reported revenues of $5,300 and associated expenses of $1,400. The Fergusons received $1,060 in qualified dividends and a $265 refund of their state income taxes. The Fergusons always itemize their deductions, get the full benefit of deducting the entire amount of state income taxes paid, and their itemized deductions were well over the standard deduction amount last year. Use Exhibit 8-10, Tax Rate Schedule, Dividends and Capital Gains Tax Rates, 2023 AMT exemption for reference. The Fergusons reported making the following payments during the year: State income…

You recently received the following e-mail from a client and friend: Hey Friend! I cannot believe it is almost year end! Only a few days before it’s 2020. As you recall, I was lucky enough to win big at the casino back on New Year’s Day earlier this year (thanks for celebrating with me). I took the $3,000 I won and bought 100 shares of stock in that cool new smartphone app company, TriviaAddiction. I just love playing that game. Anyway, the stock has done well, and I am thinking of selling before year end now that the price has reached $240 per share. Since you are my tax adviser, I thought I’d ask a couple of questions: Is there any reason to wait and sell later? If I don’t sell, the price might go down (TriviaMaster seems to be replacing TriviaAddiction as the “hot” new game). I’m thinking the price might be as low as $220 by early next year. My taxable income this year and next year is expected to be $38,500 (not including the stock sale). I think that puts me in the 12% tax…