Question 1

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

Accepted Answer

A) True 
 B)False  True

Question 2

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

Accepted Answer

A) True 
 B)False  True

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

If a moving average of the Dow Jones industrial average crosses the Dow Jones industrial average,

Accepted Answer

A)  the direction of security prices has changed 
B)  stock prices will stabilize 
C)  stock prices will go through a period of fluctuation 
D)  the investor should take profits 
A)  the direction of security prices has changed 
B)  stock prices will stabilize 
C)  stock prices will go through a period of fluctuation 
D)  the investor should take profits

Question 5

Barron's Confidence Index uses the

Accepted Answer

A)  yields on high-quality stocks 
B)  difference in yields on stocks and bonds 
C)  difference in yields between high- and low-quality bonds 
D)  difference in yields between high- and low-quality stocks 
A)  yields on high-quality stocks 
B)  difference in yields on stocks and bonds 
C)  difference in yields between high- and low-quality bonds 
D)  difference in yields between high- and low-quality stocks

Question 6

If investors believe in technical analysis,its predictions may become self-fulfilling.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Behavior finance explains dramatic price changes in securities markets to a tendency for investors to "herd."

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)  1 and 2 
B)  1 and 3 
C)  2 and 3 
D)  all of these choices 
A)  1 and 2 
B)  1 and 3 
C)  2 and 3 
D)  all of these choices

Question 11

Behavioral finance suggests that investors may fail to sell losing positions if these investors feel the pain of regret.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

An X-O chart tracks dividends and earnings.

Accepted Answer

A) True 
 B)False

Question 14

The technical approach suggests that future stock prices are forecasted by

Accepted Answer

A)  past stock prices 
B)  financial ratios 
C)  accounting statements 
D)  monetary policy 
A)  past stock prices 
B)  financial ratios 
C)  accounting statements 
D)  monetary policy

Question 15

Empirical evidence

Accepted Answer

A)  does not support efficient markets 
B)  does not support the use of technical analysis 
C)  cannot be applied to technical analysis 
D)  only supports head-and-figure charts 
A)  does not support efficient markets 
B)  does not support the use of technical analysis 
C)  cannot be applied to technical analysis 
D)  only supports head-and-figure charts

Question 16

Being familiar with a company often will result in individuals not buying stock in the company for which they work.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not used in technical analysis?

Accepted Answer

A)  moving averages 
B)  bar graphs 
C)  point-and-figure charts 
D)  P/E ratios 
A)  moving averages 
B)  bar graphs 
C)  point-and-figure charts 
D)  P/E ratios

Question 18

Behavioral finance suggests that

Accepted Answer

A)  investors are not informed 
B)  individuals make rational investment decisions 
C)  investors may be subject to bias which leads to excessive buying or selling of stocks 
D)  emotion plays only a minor role in security selection 
A)  investors are not informed 
B)  individuals make rational investment decisions 
C)  investors may be subject to bias which leads to excessive buying or selling of stocks 
D)  emotion plays only a minor role in security selection

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  the use of P/E ratios 
B)  the tendency to increase the amount invested after a stock's price has declined 
C)  selling stocks at a loss for tax purposes 
D)  constructing a diversified portfolio 
A)  the use of P/E ratios 
B)  the tendency to increase the amount invested after a stock's price has declined 
C)  selling stocks at a loss for tax purposes 
D)  constructing a diversified portfolio

Exam 14: Behavioral Finance and Technical Analysis

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

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

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

If a moving average of the Dow Jones industrial average crosses the Dow Jones industrial average,

Barron's Confidence Index uses the

If investors believe in technical analysis,its predictions may become self-fulfilling.

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

Behavior finance explains dramatic price changes in securities markets to a tendency for investors to "herd."

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

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

Behavioral finance suggests that investors may fail to sell losing positions if these investors feel the pain of regret.

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

An X-O chart tracks dividends and earnings.

The technical approach suggests that future stock prices are forecasted by

Empirical evidence

Being familiar with a company often will result in individuals not buying stock in the company for which they work.

Which of the following is not used in technical analysis?

Behavioral finance suggests that

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

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

An Introduction to Investments

The Creation of Financial Assets

Securities Markets

The Time Value of Money

The Tax Environment

Risk and Portfolio Management

Investment Companies: Mutual Funds

Closed-End Investment Companies

The Valuation of Common Stock

Investment Returns and Aggregate Measures of Stock Markets

Dividends: Past, present, and Future

The Macroeconomic Environment for Investment Decisions

Analysis of Financial Statements

The Bond Market

The Valuation of Fixed-Income Securities

Government Securities

Convertible Bonds and Convertible Preferred Stock

An Introduction to Options

Option Valuation and Strategies

Commodity and Financial Futures

Investing in Foreign Securities

Investing in Nonfinancial Assets: Collectibles, resources, and Real Estate

Portfolio Planning and Management in an Efficient Market Context

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