Exam 12: Behavioral 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.

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 law of one price posits that ability to arbitrage would force prices of identical goods to trade at equal prices.However, empirical evidence suggests that __________ are often mispriced.

____________ 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

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

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.

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

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

DeBondt and Thaler (1990) argue that the P/E effect can be explained by

Errors in information processing can lead investors to misestimate

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

Behavioral finance posits that investors possess information processing errors.Discuss the importance of information processing errors, then list and explain the four information processing errors discussed in the text.

A trin ratio of less than 1.0 is considered as a

____________ 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.