BUSI 420 Read & Interact Chapter 8 Assignment Behavioral Finance and the Psychology solution answers

BUSI 420 Read & Interact Chapter 8 Assignment Behavioral Finance and the Psychology of Investing solutions complete answers 

 

A        level is a price or level below which a stock or the market as a whole is unlikely to fall.

 

As related to behavioral finance, errors in reasoning are often called _________ errors.

 

Choosing a sure gain over a gamble is ___________ behavior.

 

The theory that how a problem is described matters to people is called _______.

 

The tendency to segment investments and other assets into separate categories, or "buckets," is called ____________.

 

The tendency to make investment decisions as a result of being fixated on a reference point (such as the initial purchase price) is called _______.

 

       finance is the area of finance dealing with the implications of investor reasoning errors on investment decisions and market prices.

 

True or false: Researchers have shown that men are more overconfident than women and therefore are less active traders.

 

True or false: Prospect theory emphasizes that investors are much happier about prospective gains than they are distressed by prospective losses.

 

Overconfident investors tend to _____ the risk of individual stocks.

 

According to frame dependence, if employees are given a choice to participate in a 401(K) plan, a _______ percentage will participate if they are automatically enrolled.

 

The unwillingness of investors to take a risk following a loss is the        effect.

 

The Las Vegas tendency to play "with house money" is most closely related to ____________.

 

True or false: Concluding that causal factors are at work behind normal distributions is called representativeness heuristic.

 

The reluctance to sell investments after they have fallen in value is called loss        .

 

The ______ illusion is our belief that random events that occur in groups are not really random (e.g., flipping four heads in a row).

 

Overconfidence generally results in        (more/less) trading and        (higher/lower) returns.

 

Overconfident investors generally believe their information is superior to that held by other investors. This belief is referred to as the        of knowledge.

 

People commit the        fallacy when they assume that a departure from what occurs on average will be corrected in the short run.

 

The snakebite effect is also called the _____-aversion bias.

 

True or false: An investor who allocates money equally to all available funds in a retirement plan (i.e., the "1/n" phenomenon) is exhibiting the use of a simple investment heuristic.

 

Concluding that there are causal factors/relationships behind random sequences is the ____________ heuristic.

 

True or false: According to the momentum effect, investors should follow the standard rule of "buy low, sell high."

 

Mutual funds that have exceptionally good performance often experience significant inflows. This is an example of the       -       fallacy.

 

The term limits to        refers to the notion that under certain circumstances, rational, well-capitalized traders may be unable to quickly correct a mispricing.

 

The gambler's fallacy assumes that because an event has not happened recently, it is ______.

 

Using past price data to identify future trading opportunities is called ________ analysis.

 

A rule of thumb that helps simplify investment decisions is called a       .

 

True or false: According to Dow theory, a correction is a reversion to the primary trend.

 

Suppose a show on CNBC highlights a particular stock. After the show, there is significant buying in the security. This is an example of ________.

 

The Elliott wave theory is a method for predicting market direction that relies on a series of _____ market price swings.

 

All of the following are potential limits to arbitrage, except:

 

If a stock breaks its resistance level, a technical analyst will typically ______ the stock.

 

Unlike fundamental analysis,        analysis does not rely on traditional valuation techniques.

 

The "Closing Arms" ratio is the ratio of the average volume in declining stocks to the average trading volume in _____ stocks.

 

Which of the following is not one of the core components of Dow theory?

 

A         strength chart illustrates the performance of one company, industry, or market versus another.

 

Which is a method for predicting market direction that relies on a series of past market price swings?

 

All of the following are charting techniques, except:

 

If a stock breaks its support level, a technical analyst would typically ______ the stock.

 

The golden mean results from a series of numbers known as        numbers.

 

A closing arms ratio above 1.00 is considered a ________ signal.

 

True or false: Relative strength charts are commonly used to analyze how a stock is likely to perform relative to its historical performance.

 

The basic idea behind charting is that particular _____ may signal the direction of a stock or the market as a whole.

 

The golden mean is approximately equal to _____.

 

A _______ cross is when a shorter-term moving average crosses through a longer-term moving average from above.

 

A ________ cross is when a shorter-term moving average crosses through a longer-term moving average from below.

 

True or false: An exponential moving average responds more quickly to the latest price information than a simple moving average.

 

True or false: If a stock experiences a golden cross, a trader would view this as a bearish signal.

 

True or false: Technical analysts are often referred to as chartists.