Exam 12: Behavioral Finance and Technical Analysis

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

Which of the following is not used in technical analysis?

According to behavioral finance, investors often select investment data that confirms a preconceived position.

Long dark candlesticks suggests

A "head and shoulder" pattern suggests that a stock's price will fall.

The adaptive market hypothesis suggests that investors lack the ability to adapt and continue to repeat mistakes.

The moving average convergence divergence indicator uses

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

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

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

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

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

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

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

Behavioral finance asserts that emotional investing produces higher returns.

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

The Dogs of the Dow strategy suggests buying the Dow stock with the lowest prices.

"Resistance" for a stock suggests that supply will blunt further price increases.

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

A price increase on small volume is more bullish than a price increase on large volume since fewer investors bought the stock.