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Chapter 12
Quizzes
Multiple Choice Quiz Out of 10 questions, you answered 2 correctly with a final grade of 20%
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2 correct (20%)
Learning Objectives
Excel Templates 8 incorrect (80%)
0 unanswered (0%)
Your Results:
The correct answer for each question is indicated by a .
1 Conventional theories presume that investors ____________, and behavioral finance presumes that they ____________.
INCORRECT
A) are irrational; are irrational
B) Overconfidence
C) Mental accounting
D) Conservatism
E) Regret avoidance
Feedback: Overconfidence may be responsible for the prevalence of active versus passive investments management.
4 If a person gives too much weight to recent information compared to prior beliefs, they would make ________ errors.
INCORRECT
A) framing
B) selection bias
C) overconfidence
D) conservatism
E) forecasting
Feedback: If a person gives too much weight to recent information compared to prior beliefs, they would make forecasting errors.
5 Statman argues that ________ is consistent with some investors' irrational preference for stocks with high cash dividends and with a tendency to hold losing
INCORRECT positions too long.
A) mental accounting
B) regret avoidance
C) overconfidence
D) conservatism
I. fundamental risk
II. implementation costs
III. model risk
IV. conservatism
V. regret avoidance
A) I and II only
E) IV and V
Feedback: Arbitrageurs may be unable to exploit behavioral biases due to fundamental risk, implementation costs, and model risk.
7 CORRECT __________ was the grandfather of technical analysis.
A) Harry Markowitz
B) William Sharpe
C) Charles Dow
D) Benjamin Graham
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1/10/2021 Multiple Choice Quiz
A) a minor trend
B) a primary trend
C) an intermediate trend
D) trend analysis
E) B and D
Feedback: A long-term movement of prices, lasting from several months to years is called a primary trend.
9 The Dow theory posits that the three forces that simultaneously affect stock prices are ____________.
INCORRECT
I. primary trend
II. intermediate trend
III. momentum trend
IV. minor trend
V. contrarian trend
C) III, IV and V
D) I, II, and IV
E) I, III, and V
Feedback: The Dow theory posits that the three forces that simultaneously affect stock prices are the primary trend, intermediate trend, and minor
trend.
10 The put/call ratio is computed as ____________, and higher values are considered ____________ signals.
INCORRECT
A) the number of outstanding put options divided by outstanding call options; bullish or bearish
B) the number of outstanding put options divided by outstanding call options; bullish
C) the number of outstanding put options divided by outstanding call options; bearish
D) the number of outstanding call options divided by outstanding put options; bullish
E) the number of outstanding call options divided by outstanding put options; bullish or bearish
Feedback: The put/call ratio is computed as the number of outstanding put options divided by outstanding call options and higher values are considered
bullish or bearish signals.
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