Question 1

A decision-making procedure resulting from limited time and attention is called __________.

Accepted Answer

A)   heuristics.
B)   convexity.
C)   volatility.
D)   anomalies.
E)   bias effect.

Question 2

____________ is a measure of the extent to which a movement in the market index is reflected in the price movements of all stocks in the market.

Accepted Answer

A)   Put-call ratio
B)   Trin ratio
C)   Breadth
D)   Confidence index
E)   All of the options are correct.

Question 3

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.
E)   the mean-variance efficiency of the selected market proxy and strategies that would have provided superior risk-adjusted returns.

Question 4

Arbitrageurs may be unable to exploit behavioral biases due to I)  fundamental risk.II)  implementation costs.III)  model risk.IV)  conservatism.V)  regret avoidance.

Accepted Answer

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

Question 5

Statman (1977)  argues that ________ is consistent with some investors' irrational preference for stocks with high cash dividends and with a tendency to hold losing positions too long.

Accepted Answer

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

Question 6

The confidence index is computed from ____________, and higher values are considered ____________ signals.

Accepted Answer

A)   bond yields; bearish
B)   odd lot trades; bearish
C)   odd lot trades; bullish
D)   put/call ratios; bullish
E)   bond yields; bullish

Question 7

Suppose on August 27, there were 1,455 stocks that advanced on the NASDAQ 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)   1.16; bullish
D)   1.16; bearish

Question 8

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 9

The put/call ratio is computed as ____________, and higher values are considered ____________ signals.

Accepted Answer

A)   the number of outstanding put options divided by outstanding call options; bullish or bearish
B)   the number of outstanding put options divided by outstanding call options; bullish
C)   the number of outstanding put options divided by outstanding call options; bearish
D)   the number of outstanding call options divided by outstanding put options; bullish
E)   the number of outstanding call options divided by outstanding put options; bearish

Question 10

Information processing errors consist ofI)  forecasting errors.II)  overconfidence.III)  conservatism.IV)  framing.

Accepted Answer

A)   I and II
B)   I and III
C)   III and IV
D)   IV only
E)   I, II, and III

Question 11

__________ 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 12

This can be an indication of bearish sentiment among sophisticated investors.

Accepted Answer

A)   short interest
B)   high volume
C)   recency news effect
D)   a low trine measure
E)   a high trine measure

Exam 12: Behavioral Finance and Technical Analysis

The put/call ratio is computed as , and higher values are considered signals.

Correct Answer
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____________ is a measure of the extent to which a movement in the market index is reflected in the price movements of all stocks in the market.

Correct Answer
verified

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

Correct Answer
verified

This can be an indication of bearish sentiment among sophisticated investors.

Correct Answer
verified

Statman (1977) argues that ________ is consistent with some investors' irrational preference for stocks with high cash dividends and with a tendency to hold losing positions too long.

Correct Answer
verified

Tests of market efficiency have focused on

Correct Answer
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A decision-making procedure resulting from limited time and attention is called __________.

Correct Answer
verified

The confidence index is computed from , and higher values are considered signals.

Correct Answer
verified

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 Answer
verified

Suppose on August 27, there were 1,455 stocks that advanced on the NASDAQ 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

Arbitrageurs may be unable to exploit behavioral biases due to I) fundamental risk.II) implementation costs.III) model risk.IV) conservatism.V) regret avoidance.

Correct Answer
verified

Information processing errors consist ofI) forecasting errors.II) overconfidence.III) conservatism.IV) framing.

Correct Answer
verified

Exam 12: Behavioral Finance and Technical Analysis

The put/call ratio is computed as ____________, and higher values are considered ____________ signals.

Correct AnswerverifiedShow Answer

____________ is a measure of the extent to which a movement in the market index is reflected in the price movements of all stocks in the market.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

This can be an indication of bearish sentiment among sophisticated investors.

Correct AnswerverifiedShow Answer

Statman (1977) argues that ________ is consistent with some investors' irrational preference for stocks with high cash dividends and with a tendency to hold losing positions too long.

Correct AnswerverifiedShow Answer

Tests of market efficiency have focused on

Correct AnswerverifiedShow Answer

A decision-making procedure resulting from limited time and attention is called __________.

Correct AnswerverifiedShow Answer

The confidence index is computed from ____________, and higher values are considered ____________ signals.

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

Suppose on August 27, there were 1,455 stocks that advanced on the NASDAQ 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

Arbitrageurs may be unable to exploit behavioral biases due to I) fundamental risk.II) implementation costs.III) model risk.IV) conservatism.V) regret avoidance.

Correct AnswerverifiedShow Answer

Information processing errors consist ofI) forecasting errors.II) overconfidence.III) conservatism.IV) framing.

Correct AnswerverifiedShow Answer

The put/call ratio is computed as , and higher values are considered signals.

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

The confidence index is computed from , and higher values are considered signals.

Correct Answer
verified

Correct Answer
verified

Suppose on August 27, there were 1,455 stocks that advanced on the NASDAQ 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

Correct Answer
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