overconfident about the signal. We find that, because overconfident traders introduce an additional source of risk, rational … bonds are an essential accompaniment of equity investment, as they serve to hedge this sentiment risk …

are not overconfident about the signal. We find that because irrational traders introduce an additional source of risk … investment, as they serve to hedge this quot;sentiment risk.quot; Even though rational investors find it beneficial to trade on …

investors, and hence, on equity risk premia and the liquidity premium. Three, the effects of transaction costs on quantities …