Hari got an e-mail about a hot stock that was poised to skyrocket in value. He promptly bought 25,000 shares at 18 cents a share, then watched the share price drop to 1 penny, until the stock was worthless. What led to Hari's poor decision on the stock?
A) He generalized from a small sample.
B) He didn't close off any options.
C) He threw good money after bad.
D) He acted only on the most readily available information.
E) He was confused by information overload.
Answer: D
Explanation: D) Hari invested money based on a suggestion in an e-mail. If he had done more research, he may have learned that the e-mail source was suspect, the company had serious difficulties, or that penny stocks—stocks worth less than $1.00—are very high risk.
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