Question 1

Barber and Odean (2001)  report that men trade __________ frequently than women.

Accepted Answer

A)  less
B)  less in down markets
C)  more in up markets
D)  more

Question 2

Conventional theories presume that investors ____________, and behavioral finance presumes that they ____________.

Accepted Answer

A)  are irrational; are irrational
B)  are rational; may not be rational
C)  are rational; are rational
D)  may not be rational; may not be rational

Question 3

____________ may be responsible for the prevalence of active versus passive investments management.

Accepted Answer

A)  Forecasting errors
B)  Overconfidence
C)  Mental accounting
D)  Conservatism

Question 4

DeBondt and Thaler believe that high P/E result from investors'

Accepted Answer

A)  earnings expectations that are too extreme.
B)  earnings expectations that are not extreme enough.
C)  stock-price expectations that are too extreme.
D)  stock-price expectations that are not extreme enough.

Question 5

Barber and Odean (2001)  report that men trade __________ frequently than women and the frequent trading leads to __________ returns.

Accepted Answer

A)  less; superior
B)  less; inferior
C)  more; superior
D)  more; inferior

Question 6

Markets would be inefficient if irrational investors __________ and actions of arbitragers were __________.

Accepted Answer

A)  existed; unlimited
B)  did not exist; unlimited
C)  existed; limited
D)  did not exist; limited Markets would be inefficient if irrational investors existed and actions if arbitragers were limited.

Question 7

__________ can lead investors to misestimate the true probabilities of possible events or associated rates of return.

Accepted Answer

A)  Information processing errors
B)  Framing errors
C)  Mental accounting errors
D)  Regret avoidance

Question 8

Forecasting errors are potentially important because

Accepted Answer

A)  research suggests that people underweight recent information.
B)  research suggests that people overweight recent information.
C)  research suggests that people correctly weight recent information.
D)  research suggests that people either underweight recent information or overweight recent information depending on whether the information was good or bad.

Question 9

____________ are good examples of the limits to arbitrage because they show that the law of one price is violated. I)  Siamese twin companies
II. Unit trusts
III. Closed-end funds
IV. Open-end funds
V. Equity carve-outs

Accepted Answer

A)  I and II
B)  I, II, and III
C)  I, III, and V
D)  IV and V

Question 10

Psychologists have found that people who make decisions that turn out badly blame themselves more when that decision was unconventional.The name for this phenomenon is

Accepted Answer

A)  regret avoidance.
B)  framing.
C)  mental accounting.
D)  overconfidence.

Question 11

Suppose on August 27, there were 1,455 stocks that advanced on the NYSE and 1,553 that declined.The volume in advancing issues was 852,581, and the volume in declining issues was 1,058,312.The trin ratio for that day was ________, and technical analysts were likely to be ________.

Accepted Answer

A)  0.87; bullish
B)  0.87; bearish
C)  1.15; bullish
D)  1.15; bearish

Question 12

Barber and Odean (2001)  report that women trade __________ frequently than men.

Accepted Answer

A)  less
B)  less in down markets
C)  more in up markets
D)  more Barber and Odean (2001)  report that men trade more frequently than women.

Question 13

Behavioral finance argues that

Accepted Answer

A)  even if security prices are wrong, it may be difficult to exploit them.
B)  the failure to uncover successful trading rules or traders cannot be taken as proof of market efficiency.
C)  investors are rational.
D)  even if security prices are wrong, it may be difficult to exploit them and the failure to uncover successful trading rules or traders cannot be taken as proof of market efficiency.

Question 14

____________ measures the extent to which a security has outperformed or underperformed either the market as a whole or its particular industry.

Accepted Answer

A)  Put-call ratio
B)  Trin ratio
C)  Breadth
D)  Relative strength

Question 15

The anomalies literature

Accepted Answer

A)  provides a conclusive rejection of market efficiency.
B)  provides conclusive support of market efficiency.
C)  suggests that several strategies would have provided superior returns.
D)  provides a conclusive rejection of market efficiency and suggests that several strategies would have provided superior returns.

Question 16

Barber and Odean (2001)  report that women __________ men.

Accepted Answer

A)  earn higher returns than
B)  earn lower returns than
C)  earn about the same returns as
D)  generate higher trading costs than

Question 17

Tests of market efficiency have focused on

Accepted Answer

A)  the mean-variance efficiency of the selected market proxy.
B)  strategies that would have provided superior risk-adjusted returns.
C)  results of actual investments of professional managers.
D)  strategies that would have provided superior risk-adjusted returns and results of actual investments of professional managers.

Question 18

An example of ________ is that it is not as painful to have purchased a blue-chip stock that decreases in value as it is to lose money on an unknown start-up firm.

Accepted Answer

A)  mental accounting
B)  regret avoidance
C)  overconfidence
D)  conservatism

Question 19

An example of ________ is that a person may reject an investment when it is posed in terms of risk surrounding potential gains, but may accept the same investment if it is posed in terms of risk surrounding potential losses.

Accepted Answer

A)  framing
B)  regret avoidance
C)  overconfidence
D)  conservatism

Question 20

Single men trade far more often than women.This is due to greater ________ among men.

Accepted Answer

A)  framing
B)  regret avoidance
C)  overconfidence
D)  conservatism

Exam 12: Behavioural Finance and Technical Analysis

Barber and Odean (2001) report that women __________ men.

Correct AnswerverifiedShow Answer

__________ can lead investors to misestimate the true probabilities of possible events or associated rates of return.

Correct AnswerverifiedShow Answer

____________ are good examples of the limits to arbitrage because they show that the law of one price is violated. I) Siamese twin companies II. Unit trusts III. Closed-end funds IV. Open-end funds V. Equity carve-outs

Correct AnswerverifiedShow Answer

Tests of market efficiency have focused on

Correct AnswerverifiedShow Answer

Barber and Odean (2001) report that women trade __________ frequently than men.

Correct AnswerverifiedShow Answer

____________ measures the extent to which a security has outperformed or underperformed either the market as a whole or its particular industry.

Correct AnswerverifiedShow Answer

Barber and Odean (2001) report that men trade __________ frequently than women.

Correct AnswerverifiedShow Answer

The anomalies literature

Correct AnswerverifiedShow Answer

DeBondt and Thaler believe that high P/E result from investors'

Correct AnswerverifiedShow Answer

Single men trade far more often than women.This is due to greater ________ among men.

Correct AnswerverifiedShow Answer

An example of ________ is that a person may reject an investment when it is posed in terms of risk surrounding potential gains, but may accept the same investment if it is posed in terms of risk surrounding potential losses.

Correct AnswerverifiedShow Answer

Behavioral finance argues that

Correct AnswerverifiedShow Answer

Forecasting errors are potentially important because

Correct AnswerverifiedShow Answer

____________ may be responsible for the prevalence of active versus passive investments management.

Correct AnswerverifiedShow Answer

Psychologists have found that people who make decisions that turn out badly blame themselves more when that decision was unconventional.The name for this phenomenon is

Correct AnswerverifiedShow Answer

Barber and Odean (2001) report that men trade __________ frequently than women and the frequent trading leads to __________ returns.

Correct AnswerverifiedShow Answer

Suppose on August 27, there were 1,455 stocks that advanced on the NYSE and 1,553 that declined.The volume in advancing issues was 852,581, and the volume in declining issues was 1,058,312.The trin ratio for that day was ________, and technical analysts were likely to be ________.

Correct AnswerverifiedShow Answer

An example of ________ is that it is not as painful to have purchased a blue-chip stock that decreases in value as it is to lose money on an unknown start-up firm.

Correct AnswerverifiedShow Answer

Conventional theories presume that investors ____________, and behavioral finance presumes that they ____________.

Correct AnswerverifiedShow Answer

Markets would be inefficient if irrational investors __________ and actions of arbitragers were __________.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Barber and Odean (2001) report that men trade frequently than women and the frequent trading leads to returns.

Correct Answer
verified

Suppose on August 27, there were 1,455 stocks that advanced on the NYSE and 1,553 that declined.The volume in advancing issues was 852,581, and the volume in declining issues was 1,058,312.The trin ratio for that day was , and technical analysts were likely to be .

Correct Answer
verified

Correct Answer
verified

Conventional theories presume that investors , and behavioral finance presumes that they .

Correct Answer
verified

Markets would be inefficient if irrational investors and actions of arbitragers were .

Correct Answer
verified