Exam 12: Behavioral Finance and Technical Analysis

Which of the following is not used in technical Analysis?

Which of the following is a fundamental principle of Behavior finance?

A point-and-figure chart such as an X-O chart tracks dividends and earnings.

The technical approach suggests that future stock Prices are forecasted by

Individuals who do the opposite of what investment analysts are suggesting are "contrarians."

Insider purchases of stock are considered bullish. F 19 Evidence supporting technical analysis is the lack of serial correlation between stock prices.

Technical analysis stresses historical information and suggests that patterns of securities prices repeat.

Behavior financial suggests that investors may fail to sell losing positions since these investors feel the pain of regret.

Few investors believe they are smarter than other investors and hence are not overconfident.

Empirical evidence

Behavioral finance suggests that

Technical analysts use financial statements as the basis for making investment decisions.

The Dogs of the Dow strategy suggests buying the lowest dividend yields of the Dow stocks.

If a 200-day moving average equals the current market price of a stock, that suggests the stock's price will stagnate.

Which of the following human emotions tend to affect Investments decisions? 1) the pain of regret 2) following the crowd or "herding" 3) selective memory

If technical analysis cannot be demonstrated to produce higher returns, that is evidence supporting efficient markets.

Acknowledging traits that affect investment behavior should lead to better investment decisions.

If a stock meets a resistance level and penetrates that level, the implication is avoid the stock.

The Dogs of the Dow strategy

The Dow Theory considers price movements in the Dow Jones industrial and transportation averages.