Exam 12: Behavioural Finance and Technical Analysis

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.

Tests of market efficiency have focused on

____________ 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

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

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

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

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

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

Behavioral finance argues that

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

Forecasting errors are potentially important because

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

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.

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

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

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

The anomalies literature

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

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

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 ________.