Some investors may conclude that huge risk can be assumed using the returns compared with the initial investment principal. This is referred to as "playing with house money." This is known as:

A. Mental Accounting Bias
B. Illusion of Control Bias
C. Framing Bias

Correct Answer: A

Mental accounting bias may make an investor irrationally differentiate between returns earned from the income and those flowing from capital appreciation. Even though investors may urge to retain principal investment, mental account bias may inspire them to stick to the idea of spending the income generated by the principal.