Making money decisions based on fear or hype instead of logic — like panic-selling during a crash or chasing a trendy stock everyone's talking about.

• A. Risk Management
• B. Buy and Hold Strategy
• C. Saving
• D. Emotional Investing

Answer: (D)

The main idea being tested is making investment decisions based on emotions rather than a logical plan. This scenario describes emotional investing—letting fear drive panic selling during a crash or chasing a trendy stock because of hype. Emotional investing often leads to buying high and selling low, which can derail long-term goals and undermine disciplined strategies.

Risk management is about assessing and mitigating risk through methods like diversification, position sizing, and setting limits, not reacting to emotions. A buy-and-hold approach aims to ride out volatility with a long-term view rather than reacting to short-term swings. Saving focuses on setting aside money for future needs and isn’t about reacting to market psychology.