Exam 12: Asset Bubbles

Suppose the dividend paid on a share takes one of four values, each with equal probability: $0.00, $0.08, $0.28 and $0.60. The share trades for 15 periods. The prevailing market interest rate is 10%. If you wanted to implement a flat fundament value for this share then you should set that fundamental value equal to:

(Multiple Choice)

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Question 21

How do Martin Kocher and his colleagues manipulate the degree of self-control in their study? What do they find with regards to the behaviour of those with depleted self-control, those with non-depleted self-control and those groups consisting of a mixture of both types when it comes to trading a financial asset with declining fundamental value?

(Essay)

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Question 22

Lei, Noussair and Plott's "excess trading" hypothesis regarding trading in financial asset markets relates to which of the following?

(Multiple Choice)

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Question 23

Which of the following is not a likely explanation for the bubble and crash pattern frequently seen in markets for financial assets?

(Multiple Choice)

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Question 24

Which of the following statements about a share with a declining fundamental value is correct?

(Multiple Choice)

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Question 25

One way to think of "adaptive expectations", is that they:

(Multiple Choice)

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Question 26

Lei, Noussair and Plott argue that the familiar bubble and crash pattern observed in markets for financial assets may be caused by "excess trading" on the part of traders in the context of lab experiments. What do the authors mean by "excess trading"? How do they test this hypothesis by setting up a second market and what are the characteristics of that market?

(Essay)

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Question 27

In the Haruvy, Lahav and Noussair study, the participants are asked to enter their prediction for the assets' market price for all remaining periods rather than just for the upcoming period. It is likely that doing so would:

(Multiple Choice)

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Question 28

Suppose the dividend paid on a share takes one of four values, each with equal probability: $0.00, $0.08, $0.28 and $0.60. The share trades for 15 periods. You have chosen to implement a flat fundamental value of $4.80 for this share. This means that you must set the interest rate on cash holdings at:

(Multiple Choice)

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Question 29

In the Haruvy, Lahav and Noussair study, the participants are asked to enter their prediction for the assets' market price for all remaining periods rather than just for the upcoming period. The authors find that when they do this with participants taking part in a series of markets lasting 15 periods each:

(Multiple Choice)

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Question 30

Suppose you want to implement a market for a share with a flat fundamental value (P). Denote by E the per period expected dividend for this share and by R the market interest rate. Which of the following formula represents the correct expression for the flat fundamental value in this case?

(Multiple Choice)

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Question 31

Which of the following is an accurate description of the "no speculation" asset market set up in the study by Lei, Noussair and Plott.

(Multiple Choice)

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Question 32

Suppose in any period the dividend on a share takes one of four values: $0.00, $0.08, $0.28 or $0.60 with equal probability. The share trades for 15 periods and then become valueless. You have just bought this share prior to Period 9 for $2.48. This implies that:

(Multiple Choice)

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Question 33

Suppose a share is trading for $25 in the current period. You enter into a contract with another trader that once the last trading period ends you will sell 100 shares to this other trader for $18 per share. This implies that:

(Multiple Choice)

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Question 34

Suppose in any period dividend on a share takes one of four values, $0.00, $0.04, $0.14 or $0.30 with equal probability in each period and trades for 15 periods after which it becomes valueless. At the beginning of the 11^th period, the expected dividend from this share is:

(Multiple Choice)

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Question 35

Suppose a share has the flat fundamental value of $3.60. The share trades for 15 periods. The market interest rate is 10%. This implies that the per period expected dividend on the share must be:

(Multiple Choice)

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Question 36

Which of the following statements about a share with a flat fundamental value is incorrect?

(Multiple Choice)

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Question 37

Showing 21 - 37 of 37

Lei, Noussair and Plott's "excess trading" hypothesis regarding trading in financial asset markets relates to which of the following?

Which of the following is not a likely explanation for the bubble and crash pattern frequently seen in markets for financial assets?

Which of the following statements about a share with a declining fundamental value is correct?

One way to think of "adaptive expectations", is that they:

In the Haruvy, Lahav and Noussair study, the participants are asked to enter their prediction for the assets' market price for all remaining periods rather than just for the upcoming period. It is likely that doing so would:

Suppose you want to implement a market for a share with a flat fundamental value (P). Denote by E the per period expected dividend for this share and by R the market interest rate. Which of the following formula represents the correct expression for the flat fundamental value in this case?

Which of the following is an accurate description of the "no speculation" asset market set up in the study by Lei, Noussair and Plott.

Suppose in any period the dividend on a share takes one of four values: $0.00, $0.08, $0.28 or $0.60 with equal probability. The share trades for 15 periods and then become valueless. You have just bought this share prior to Period 9 for $2.48. This implies that:

Suppose a share is trading for $25 in the current period. You enter into a contract with another trader that once the last trading period ends you will sell 100 shares to this other trader for $18 per share. This implies that:

Suppose in any period dividend on a share takes one of four values, $0.00, $0.04, $0.14 or $0.30 with equal probability in each period and trades for 15 periods after which it becomes valueless. At the beginning of the 11^th period, the expected dividend from this share is:

Suppose a share has the flat fundamental value of $3.60. The share trades for 15 periods. The market interest rate is 10%. This implies that the per period expected dividend on the share must be:

Which of the following statements about a share with a flat fundamental value is incorrect?

How We Decide

Experiments in Behavioural Economics

Gut Feelings and Effortful Thinking

Expected Utility Theory and Prospect Theory

Probabilistic Thinking

Thinking Strategically

Ultimatum Game and Market Implications

Trust Game and Market Implications

Social Dilemma Games

Coordination Problems

Behavioual Analysis of Markets

Filters

Exam 12: Asset Bubbles

Lei, Noussair and Plott's "excess trading" hypothesis regarding trading in financial asset markets relates to which of the following?

Which of the following is not a likely explanation for the bubble and crash pattern frequently seen in markets for financial assets?

Which of the following statements about a share with a declining fundamental value is correct?

One way to think of "adaptive expectations", is that they:

In the Haruvy, Lahav and Noussair study, the participants are asked to enter their prediction for the assets' market price for all remaining periods rather than just for the upcoming period. It is likely that doing so would:

Suppose you want to implement a market for a share with a flat fundamental value (P). Denote by E the per period expected dividend for this share and by R the market interest rate. Which of the following formula represents the correct expression for the flat fundamental value in this case?

Which of the following is an accurate description of the "no speculation" asset market set up in the study by Lei, Noussair and Plott.

Suppose in any period the dividend on a share takes one of four values: $0.00, $0.08, $0.28 or $0.60 with equal probability. The share trades for 15 periods and then become valueless. You have just bought this share prior to Period 9 for $2.48. This implies that:

Suppose a share is trading for $25 in the current period. You enter into a contract with another trader that once the last trading period ends you will sell 100 shares to this other trader for $18 per share. This implies that:

Suppose in any period dividend on a share takes one of four values, $0.00, $0.04, $0.14 or $0.30 with equal probability in each period and trades for 15 periods after which it becomes valueless. At the beginning of the 11th period, the expected dividend from this share is:

Suppose a share has the flat fundamental value of $3.60. The share trades for 15 periods. The market interest rate is 10%. This implies that the per period expected dividend on the share must be:

Which of the following statements about a share with a flat fundamental value is incorrect?

How We Decide

Experiments in Behavioural Economics

Gut Feelings and Effortful Thinking

Expected Utility Theory and Prospect Theory

Probabilistic Thinking

Thinking Strategically

Ultimatum Game and Market Implications

Trust Game and Market Implications

Social Dilemma Games

Coordination Problems

Behavioual Analysis of Markets

Filters

Suppose in any period dividend on a share takes one of four values, $0.00, $0.04, $0.14 or $0.30 with equal probability in each period and trades for 15 periods after which it becomes valueless. At the beginning of the 11^th period, the expected dividend from this share is: