Exam 12: Behavioral Finance and Technical Analysis

Tests of market efficiency have focused on

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

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

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 ________.

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

____________ 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.

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.

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

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

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

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.

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