Explain the behavioral biases at work

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Reference no: EM132022463

A trendy investment instrument is what is called an 'equity-indexed-annuity' or EIA. This investment guarantees you a minimum rate of return in the stock market while ensuring you against any losses. EIAs are typically described as offering "the upside without the downside." But in exchange for limiting your losses, EIAs also slap a ceiling over your gains. Explain the behavioral biases at work in this example for why this investment option may be so popular.

Reference no: EM132022463

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